Gold surged more than one percent on Thursday, climbing to $4,483 after rebounding from intraday lows of $4,424, as falling oil prices dampened inflation concerns and boosted precious metal demand. The rally in XAU/USD comes as crude prices continue their steep decline, reducing pressure on central banks to maintain aggressive monetary policy stances and diminishing the appeal of inflation-hedging alternatives to gold.
Market participants are also displaying increased risk appetite following speculation that diplomatic progress may be emerging in the ongoing US-Iran conflict. This combination of easing geopolitical tensions and subdued inflation expectations through lower energy costs has created a supportive environment for the non-yielding precious metal. Traders and brokers are closely monitoring crude oil movements as a key indicator for gold’s near-term direction, with sustained weakness in energy markets likely to provide further tailwinds for bullion prices.
FXnCO Insight
Watch oil price action as the primary driver for gold positioning, with continued crude weakness likely supporting further XAU/USD upside toward the $4,500 psychological level.
Source: FXStreet