GOLD: Focus on the US CPI and PPI
Gold prices reversed course and rose on Monday (May 11), ultimately closing higher as investors closely watched developments in US-Iran diplomacy and awaited key US inflation data later this week.
Spot gold closed at $4734.73 on Monday, up 0.41% on the day, after earlier plunging more than 1%.
What happened to gold prices?$Gold - main 2606(GCmain)$
During Asian trading on Monday, spot gold prices initially fell to a low of $4647.88 per ounce due to rising oil prices following weekend news of renewed tensions between the US and Iran.
However, gold prices subsequently rebounded during European and American trading sessions, briefly approaching $4750 per ounce.
US President Trump's latest statement that the ceasefire agreement with Iran was "at risk" spurred a surge in oil prices.
ING analysts stated in a report, "This setback has created uncertainty surrounding the ceasefire timetable, and persistently high inflation risks have reinforced expectations of persistently high interest rates. This expectation has been under pressure on gold throughout the conflict."
ING predicts gold prices will rise to $5,000/ounce by the end of the year, but the stalled peace negotiations have increased short-term uncertainty.
Furthermore, Indian Prime Minister Modi called on the public to refrain from buying gold for the next year to protect foreign exchange reserves. This caused a sharp drop in the share price of Indian jewelry retailers. India is the world's second-largest gold consumer.
The market will focus on the US Consumer Price Index (CPI) released on Tuesday and the Producer Price Index (PPI) on Wednesday. Gold is currently priced at $4,660!
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