Gold prices fell sharply during Asian trading on Thursday, following statements from US President Donald Trump regarding the ongoing military campaign in Iran, raising concerns about the potential for interest rate cuts by the US Federal Reserve. This decline brought the price of gold down to $4,606 per ounce, a decrease of 3.72% from the previous session.
This drop came after gold had reached its highest level since March 19, when prices had previously surged. In his peak-time speech, Trump indicated that Washington would launch strong military strikes against Iran in the near future, prompting a swift reaction in financial markets.
Details of the Event
The markets were significantly affected after Trump's speech, as yields on 10-year US Treasury bonds rose, increasing pressure on gold, which is priced in dollars. Jaronvit Saksri, assistant general manager at PI Securities, noted that gold has not yet benefited from the conflict in the Middle East, as US bond yields increased and holdings in the SPDR Gold Trust declined amid ongoing uncertainty.
Locally, gold bars were traded at 71,400 baht per baht weight, with price fluctuations leading to 40 adjustments in prices.
Background & Context
Gold prices experienced a decline of 11% in March, marking the worst monthly performance since 2008, following the onset of the war in Iran on February 28. The rise in oil prices has heightened inflation concerns, complicating the monetary policy outlook for the Federal Reserve.
Inflationary pressures are increasing following the rise in oil prices, reducing the likelihood of interest rate cuts by the Federal Reserve. YLG Bullion & Futures and Globlex Research Department indicated that gold remains under selling pressure after failing to break the resistance level at $4,800 per ounce.
Impact & Consequences
The decline in gold prices is a direct result of geopolitical and economic tensions, as any escalation in the conflict in the Middle East may lead to increased demand for gold as a safe haven. However, rising US bond yields may limit this demand, keeping the market in a state of anticipation.
Analysts expect gold to continue facing pressure, forecasting a support level at $4,400 per ounce, with resistance expected at $4,660. Local prices may range between 74,000-75,000 baht per baht weight.
Regional Significance
Arab countries are significantly affected by fluctuations in gold prices, as gold is considered one of the important assets in many Arab economies. With ongoing tensions in the Middle East, this may lead to an increase in demand for gold as a means of protection against economic risks.
In conclusion, gold remains in a state of uncertainty as investors look forward to upcoming US economic data, including the non-farm payroll report, for indications of potential interest rate cuts by the Federal Reserve.