Gold Price Rises Supported by Increased Buying Amid Lower Prices

SadaNews Economy - Gold rose due to buying activity during the dip, while traders monitored a series of developments in the Middle Eastern conflict searching for indicators of the impact of energy prices on inflation.

Gold rose in spot transactions to $4,046.96 per ounce.

Oil saw little change after two days of gains, even after U.S. forces launched a new round of strikes on Iranian targets, with President Donald Trump vowing that Tehran "will pay the price" for killing three American soldiers in recent days.

The Yemeni Houthi group entered the fray, stating that it would impose a blockade on maritime navigation to Saudi Arabia, prompting the "Coalition to Support Legitimacy in Yemen" led by the Kingdom to confirm it has taken steps to protect vessels sailing in the Red Sea.

Despite the escalation, Iran stated that intermediaries are in contact regarding proposals on how to mitigate hostilities after more than a week of intensified fighting, with Reuters reporting a proposal for a 10-day ceasefire.

The conflict, now in its fifth month, is once again driving up prices for goods used in manufacturing and food production. Traders must balance rising energy prices with the potential for the Federal Reserve to raise interest rates on one hand, and weak U.S. economic data on the other. High borrowing costs are a negative factor for gold, which yields no return.

Despite recent clashes, gold shows some support indicators at the key psychological level of $4,000 per ounce, signaling buying activity during the dip that was also observed last week.

However, Christopher Wong, an analyst at Oversea-Chinese Banking Corp, stated that gold's rise may remain limited unless oil prices decline and expectations for interest rate hikes by the Federal Reserve wane.

He added that daily momentum indicators do not currently show a clear direction, and the longer-term outlook is that "the pace of decline should likely slow unless macroeconomic conditions worsen further."