Gold prices rose in Thursday's trading session thanks to falling oil prices and a weakening USD, as investors assessed new prospects for the possibility of ending the conflict between the US, Israel and Iran.
Spot gold prices rose 0.47% to 4,459.66 USD/ounce at 3:25 PM Vietnam time. Meanwhile, US gold futures for August delivery rose 0.6% to 4,493.30 USD/ounce.
The weakening USD has made gold – valued in the greenback – more attractive to investors holding other currencies.
Mr. Tim Waterer – Market Analysis Director at KCM Trade commented:
The upward momentum of gold is still heavily dependent on the diễn biến of oil prices and the USD. Precious metals only really increase when these two factors cool down, making the sustainable upward outlook for gold prices heavily dependent on positive information related to negotiations between the US and Iran.
On Wednesday, the administration of US President Donald Trump said that Israel and Lebanon had agreed to implement a ceasefire agreement to end hostilities. This information increased expectations for a broader agreement to resolve the conflict involving Iran.
At the same time, the US House of Representatives controlled by the Republican Party passed a resolution to prevent President Donald Trump from continuing the war with Iran. This move reflects increasing concerns within the Republican Party about the three-month conflict.
Oil prices fell on Thursday after a ceasefire agreement between Lebanon and Israel sparked hope for a peace agreement between the US and Iran.
Usually, high oil prices can increase inflationary pressure and force central banks to maintain high interest rates for longer. Although gold is seen as an inflation hedging tool, a high interest rate environment is detrimental to precious metals because gold does not yield yields.
Mr. Matt Simpson - senior analyst at StoneX believes that the long-term upward trend of gold is not over yet.
I don't think the gold price rise market has ended, but it is clearly coming to a stage where adjustments and purification are needed. I expect gold prices to fluctuate quite strongly from now until the end of the year, but still slightly tilt towards an upward trend with a target of around 5,000 USD/ounce." - Mr. Matt added.
Meanwhile, Mr. John Williams – Chairman of the Federal Reserve Bank of New York said he does not believe that the inflation risks arising from the current conflict will last.
He also reiterated the view that there is currently no reason for the US Federal Reserve (Fed) to change its monetary policy orientation.
On other precious metals markets, spot silver prices rose 0.8% to $73.26/ounce. Platinum rose 1.1% to $1,879.75/ounce, while palladium rose 0.6% to $1,310/ounce.
