Gold prices hovered near a two-week high on Thursday after reaching their strongest level in the previous session, as investors balanced escalating geopolitical tensions in the Middle East against concerns that rising oil prices could fuel inflation and keep the Federal Reserve on a restrictive monetary policy path.
As of 1:31 PM WIB, spot gold (XAU/USD) slipped 0.1% to $4,127.99 per ounce, while Gold Futures declined 0.5% to $4,130.62. Meanwhile, silver (XAG/USD) gained 0.3% to $59.88 per ounce, and platinum (XPT/USD) advanced 0.8% to $1,658.28 per ounce. Gold continued to consolidate recent gains following a nearly 3% rally over the previous two trading sessions.
Middle East Conflict Keeps Inflation Risks in Focus
Geopolitical tensions remain a key driver of market sentiment as the United States and Iran show no signs of returning to negotiations. Meanwhile, attacks on oil tankers transiting the Red Sea were reported for the first time since the conflict began in late February.
The Iran-backed Houthi movement in Yemen claimed responsibility for the attacks, raising fresh concerns over one of the world's most critical shipping routes for Saudi Arabian crude oil exports. The renewed disruption has helped keep crude oil prices near multi-week highs, prompting investors to reassess inflation expectations ahead of next week's Federal Reserve policy meeting.
Persistently high energy prices could complicate the inflation outlook and strengthen the case for maintaining elevated interest rates. Higher borrowing costs generally reduce the appeal of non-yielding assets such as gold by increasing the opportunity cost of holding the precious metal.
Fed Rate Outlook Remains Uncertain
Market participants remain divided over whether the Federal Reserve will deliver another interest rate hike at next week's meeting. The lack of clear policy guidance from Fed Chair Kevin Warsh has added to uncertainty, leaving traders closely focused on incoming economic data and central bank signals.
Any indication that inflation remains persistent could reinforce expectations for tighter monetary policy, while a more cautious tone from policymakers may provide additional support for gold prices.
Dip Buying Supports Gold Despite Higher Interest Rate Expectations
According to analysts at ANZ, investors continue rebuilding their gold positions despite expectations that interest rates may remain higher for longer. Recent price weakness has attracted bargain hunters rather than triggering widespread selling.
The bank noted that non-commercial net long positions have climbed to their highest level since January. In addition, renewed inflows into gold-backed exchange-traded funds (ETFs) suggest that investors are increasingly using gold as a hedge against elevated equity market valuations and ongoing geopolitical uncertainty.
ANZ also highlighted that gold has demonstrated remarkable resilience even as rising energy prices point to a more restrictive monetary policy environment. Strong dip-buying demand has helped offset the downward pressure that higher inflation expectations and rising interest rates would typically place on precious metals.
Gold Holds Above Key $4,000 Support
Gold has remained firmly above the important psychological support level of $4,000 per ounce this week after suffering a sharp correction from its January record high. Traders are now watching whether bullish momentum can continue building toward the next major resistance level near $4,200 per ounce.
With geopolitical risks, inflation concerns, and the upcoming Federal Reserve meeting dominating market sentiment, gold is likely to remain highly sensitive to both economic data releases and developments in the Middle East. A breakout above the $4,200 resistance could reinforce bullish momentum, while a hawkish Fed stance may trigger renewed profit-taking in the precious metal.