Gold prices were headed for a weekly loss on Friday as easing geopolitical tensions and renewed concerns over inflation and higher US interest rates continued to weigh on sentiment, while RHB Investment Bank Bhd said the correction in the precious metal is still underway.
Spot gold fell 0.7% to US$4,183.19 an ounce and was on track for a 3.4% weekly decline after tumbling to a more than six-month low earlier this week. The metal has lost about 20% since the outbreak of the Iran conflict amid concerns that higher energy prices could fuel inflation and keep interest rates elevated.
The market had briefly found support after US President Donald Trump called off planned military strikes on Iran and indicated that a peace deal could be reached soon. However, uncertainty remained after Iran said no final agreement had been made.
Edward Meir, an analyst at Marex, said geopolitical developments continued to drive prices.
“The markets will be paying attention to any signal that the Fed could raise rates, and if they hint at moving in that direction, I think gold could probably break below the US$4,000 mark,” he said.
Adding to the pressure, US producer prices rose more than expected in May, reinforcing expectations that the Federal Reserve may keep monetary policy tighter for longer. Traders are currently pricing in a 60% chance of a rate hike in December.
Separately, RHB Research maintained its bearish view on COMEX gold, noting that profit-taking activity remained active despite Thursday’s rebound. The research house said gold continues to trade below its 50-day and 200-day moving averages, with US$4,400 seen as immediate resistance and support levels at US$4,000 and US$3,700.
RHB advised traders to maintain short positions, saying the negative bias remained intact.
