Today's markets analysis on behalf of Thadeu Dos Santos, Regional Director at Infinox
(MENAFN- MENAFNEditorial) Gold prices moved higher on Friday and are on track to end a two-week losing streak, helped by softer oil prices. However, the metal remains within its recent trading range.
Crude prices eased after US President Donald Trump said Washington would not escalate tensions with Iran before next month's midterm elections, while Tehran said it would soon present proposals relayed through intermediaries to the US. Lower energy prices could temper inflation concerns and ease pressure on yields, providing some support to gold. A more durable recovery, however, would likely require further progress in talks and clearer evidence that shipping conditions through the Strait of Hormuz are normalising.
The interest-rate backdrop remains challenging and leaves gold vulnerable to renewed selling pressure. US Treasury yields stabilised after Thursday's decline but remain elevated, as Federal Reserve Governor Christopher Waller signalled that further tightening is likely to be needed, keeping a December hike alive. Fiscal concerns are also keeping longer-dated yields near multi-decade highs.
The pressure is not limited to the US. Japan's government has signalled that it would not resist further Bank of Japan tightening, while markets continue to expect another ECB increase before year-end and French political risk keeps European borrowing costs elevated.
Underlying demand provides an important counterweight, supported by record third-quarter ETF inflows and continued central bank buying. That demand could amplify any recovery if yields begin to fall, while also helping to limit the extent of further declines if monetary conditions remain tight.
Looking ahead, next week's US inflation data could provide the main test for yields and gold. The previous core inflation report surprised to the downside, but headline and core inflation remained at 3.4% and 2.4%, respectively, still above the Fed's target. Further evidence of easing price pressures could reduce expectations for additional tightening and pull yields lower, creating a more supportive environment for gold. Conversely, persistent inflation
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Crude prices eased after US President Donald Trump said Washington would not escalate tensions with Iran before next month's midterm elections, while Tehran said it would soon present proposals relayed through intermediaries to the US. Lower energy prices could temper inflation concerns and ease pressure on yields, providing some support to gold. A more durable recovery, however, would likely require further progress in talks and clearer evidence that shipping conditions through the Strait of Hormuz are normalising.
The interest-rate backdrop remains challenging and leaves gold vulnerable to renewed selling pressure. US Treasury yields stabilised after Thursday's decline but remain elevated, as Federal Reserve Governor Christopher Waller signalled that further tightening is likely to be needed, keeping a December hike alive. Fiscal concerns are also keeping longer-dated yields near multi-decade highs.
The pressure is not limited to the US. Japan's government has signalled that it would not resist further Bank of Japan tightening, while markets continue to expect another ECB increase before year-end and French political risk keeps European borrowing costs elevated.
Underlying demand provides an important counterweight, supported by record third-quarter ETF inflows and continued central bank buying. That demand could amplify any recovery if yields begin to fall, while also helping to limit the extent of further declines if monetary conditions remain tight.
Looking ahead, next week's US inflation data could provide the main test for yields and gold. The previous core inflation report surprised to the downside, but headline and core inflation remained at 3.4% and 2.4%, respectively, still above the Fed's target. Further evidence of easing price pressures could reduce expectations for additional tightening and pull yields lower, creating a more supportive environment for gold. Conversely, persistent inflation
Appreciate your cooperation in publishing the analysis.
For any inquiry or more information please do not hesitate to contact us.
Regards
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