Solid Gold Berjangka – Gold prices (XAU/USD) weakened for the third consecutive day, trading below the psychological level of US$4,000 per troy ounce during Thursday’s Asian session (November 12). The downward pressure stems from a strengthening US dollar, fueled by consumer inflation data that reinforced expectations of interest rate hikes by the Federal Reserve.
Higher-than-expected US Consumer Price Index (CPI) data for October has bolstered market conviction that the Federal Reserve will raise interest rates again in December. Several FOMC officials have also made hawkish remarks, further signaling the likelihood of continued monetary tightening.
Market participants have even begun to factor in the possibility of a 50-basis-point rate hike. These expectations have pushed the yield on the 10-year US Treasury note back above 5%, providing additional support for the dollar.
Sentiment toward the dollar is further strengthened by the view that the Federal Reserve has greater latitude to implement policy without political pressure. With the market now almost fully pricing in a December rate hike, the outlook for monetary policy remains a primary headwind for gold.
On the geopolitical front, US-Iran tensions near the Strait of Hormuz continue to sustain demand for the dollar as a safe-haven asset. Attacks in the region and threats to close this strategic waterway have further heightened global market uncertainty.
The combination of a strong dollar, high yields, and expectations of interest rate hikes keeps the pressure on gold firmly in place. Moving forward, the market will closely monitor US Initial Jobless Claims, commentary from Federal Reserve officials, and geopolitical developments for further clues regarding the next direction for XAU/USD. (srh)