Gold prices remained steady during early week trading in Asia amid a cautious and watchful atmosphere, as two key factors continue to influence market movements: developments in Middle East tensions on one side, and the global monetary policy path on the other. So far, there are no real signs of an improvement in risk appetite or a strong return of demand.
This comes at a time when gold has been under pressure for the second consecutive month, with concerns related to the impact of ongoing conflicts on inflation levels still dominating the market, which has reduced gold’s traditional appeal as a safe haven asset.
In terms of price action, spot gold held steady near recent levels, while futures contracts showed slight pressure, reflecting a state of anticipation rather than a clear market direction. Other metals showed more resilience, but without strong momentum capable of changing the overall picture.
On the geopolitical side, developments linked to the Strait of Hormuz have brought tensions back into focus, following U.S. movements and statements related to securing navigation in the region, along with additional military reinforcements, in contrast with clear warnings from the Iranian side. This unstable situation continues to pressure energy markets and inflation expectations, making short term forecasting more difficult.
Oil prices declined slightly at the start of the week after remarks from U.S. President Donald Trump regarding efforts to assist ships stranded in the Strait of Hormuz. However, the market remained supported above the $100 per barrel level amid the absence of any political breakthrough between Washington and Tehran. Brent crude saw a modest decline, while West Texas Intermediate also gave up part of its previous gains, in a session driven more by caution than clear direction, with supply disruptions from the region still influencing sentiment.
The broader outlook remains supported by two main factors: partial disruption in Gulf supply chains and ongoing geopolitical tensions that have yet to reach a resolution. This keeps prices relatively elevated, with risks tilted to the upside if the crisis continues without practical solutions. Meanwhile, political negotiations between the United States and Iran remain inconclusive, with clear differences in priorities, making the Strait of Hormuz a key pressure point for the energy market at present.
OPEC+ also announced a new increase in production targets for several countries next month, but its impact remains limited for now, as ongoing tensions continue to hinder the actual flow of supply. This makes the announced figures appear more theoretical than a true reflection of market conditions.
On the monetary policy front, expectations still lean toward a continued hawkish stance from major central banks, with no exclusion of further interest rate moves if inflationary pressures persist, especially those linked to energy. This directly affects gold, as a non yielding asset, reducing its attractiveness compared to interest bearing assets, making any strong upside in the current period dependent on a clear shift in both geopolitical and monetary landscapes.
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