Gold sold off as fresh Middle East tensions pushed oil higher and revived worries that inflation could stay elevated, keeping the Federal Reserve on a tighter policy path. ING analysts see the metal vulnerable around $4,000/oz ahead of US inflation data and Fed Chair Kevin Warsh's testimony.
Gold fell sharply on Monday, with silver also under pressure, after renewed tensions in the Middle East drove oil prices higher. According to ING analysts Warren Patterson and Ewa Manthey, the jump in energy costs reinforces concerns that inflation could remain elevated and keep the Federal Reserve on a tighter policy path.
Higher US yields and a stronger dollar continue to weigh on precious metals. That combination has left gold vulnerable around the $4,000/oz level, with the market watching developments around the Strait of Hormuz and what they mean for energy prices, inflation and interest rates.
Attention now turns to US inflation data and Fed Chair Kevin Warsh's testimony before Congress this week. A stronger CPI print or hawkish Fed messaging would add pressure on gold and silver, according to ING. Any signs that inflation risks are easing, or that the Fed is less inclined to tighten further, could instead help stabilise prices after the recent sell-off.
Source: FXStreet (snippet-based)
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