Spot Gold rebounded more than 1% on Wednesday, after a steep loss in the prior trading day, as ongoing Middle East hostilities brought forth concerns over a protracted conflict in the region.
Yet, a firmer US Dollar was capping Gold’s upside.
Yesterday Israel struck a building where clerics were meeting to elect a new Supreme Leader, as the war on Iran entered its fifth day.
The conflict’s outcome remains uncertain, with US President Donald Trump voicing concern that the attacks could lead to the emergence of a new Iranian leadership as troubling as the preceding regime.
The US Dollar held not far from a more than five-week high amid concerns that rising energy costs could reignite inflation. This has prompted a reassessment of the Federal Reserve’s monetary policy path.
A firmer dollar makes dollar-priced Gold less appealing to international investors holding other currencies.
“There is speculation that ultimately, the price of gasoline could force the President’s hand and bring the conflict to a quick end,” Robert Yawger of Mizuho Securities USA wrote in a note to clients.
“In the near term, gold remains caught between safe-haven demand and macro pressure,” analysts at ING noted.
“Sustained upside would require either prolonged geopolitical stress or renewed Fed easing,” they added.
Spot Gold was last up 1.20% on the day to trade at $5,150.11 per troy ounce.
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