Gold fell in early Asian trading Friday, with spot prices dropping 0.8% to $4,184.93 a troy ounce, as the market absorbed a shift in sentiment driven by a more hawkish-leaning Federal Reserve that outweighed the near-term relief provided by the U.S.-Iran interim peace deal, according to ANZ Research analysts.
In a note to clients, ANZ Research analysts said the precious metal’s price was being weighed down by a more hawkish Fed outweighing relief from the U.S.-Iran interim peace deal. The analysts pointed to Federal Reserve Chairman Kevin Warsh, who in recent days has vowed to restore price stability after the central bank held rates earlier this week, and has signaled growing support for interest rate hikes. The shift follows a week in which the Fed held its benchmark interest rate steady, with Warsh’s first public statements as chair focusing on a commitment to bringing inflation down.
The development comes as market participants had been watching the U.S.-Iran interim peace deal as a potential source of relief from geopolitical uncertainty. The deal, which has eased fears of prolonged energy supply disruptions, provided some positive sentiment for markets, but the Fed’s hawkish posture proved the dominant factor in gold’s price movement, according to the note.
MSI previously reported that gold had fallen on renewed U.S. strikes against Iran on June 10, and on a firmer dollar as U.S.-Iran talks remained unsettled on June 1, with prices moving in response to the shifting geopolitical and monetary policy landscape throughout the month.