Today’s markets analysis on
Gold dropped to its lowest level since March as fresh military action in the Middle East reinforced inflationary concerns and bolstered bets for more hawkish central banks globally. This comes on top of the stronger-than-expected job market figures released last week, which could allow for a more restrictive monetary policy stance.
The metal could remain under pressure as bond yields stay elevated, raising the opportunity cost of holding non-yielding assets. Interest rate expectations continue to point toward a hawkish tilt across major economies. The Federal Reserve is expected to leave rates unchanged for now, though a hike is increasingly anticipated later in the year, while both the ECB and the BOJ are expected to raise rates at their next meetings.
However, gold could return to the upside over the long-term if inflation concerns subside amid ongoing central bank purchases. In this regard, China’s central bank extended its gold-buying streak to 19 months, leaving official-sector demand as the structural support for the market, a trend other central banks could reinforce.
Zaid Barem / ymm
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