Gold Surpasses $4,100 as Selling Pressure Eases

SadaNews - Gold continued its gains, supported by buying activity at lower prices, despite rising tensions in the Middle East keeping the market under pressure, as it rose to $4,123.68 per ounce.

The precious metal increased by up to 1%, trading above $4,100 per ounce, extending gains of nearly 2% from the previous session. Silver also climbed close to $60 per ounce.

The waves of increase came at a time when Treasury yields remained high, and the renewed hostilities between the United States and Iran showed no signs of a resolution.

This momentum has already attracted new flows into exchange-traded funds, with total holdings rising by about 7.4 tons on Tuesday, according to a Bloomberg tally. This was the highest daily inflow in over a month.

Justin Lin, an analyst at Global X ETFs, noted the sharp decline in volatility back to levels last seen in early June: "This could be a breakout after the collapse in volatility over the past few days." He added: "It seems that buyers have successfully defended the $4,000 level, and selling pressure has eased."

The wave of rising gold prices ignored the latest developments in the Middle East. U.S. President Donald Trump downplayed the likelihood of immediate talks with Iran after both sides exchanged strikes near the Strait of Hormuz, while Houthi fighters in Yemen threatened shipping in the Red Sea.

Trump's remarks came after the tenth day of U.S. and Iranian strikes, as mediators continued efforts to resume negotiations. Oil prices rose again on Wednesday, marking a surge in July since the resumption of hostilities in the ongoing war that has lasted for nearly five months.

The conflict between the United States and Iran helped end several years of gold price increases, with the metal falling about a quarter from its peak recorded in January near $5,600 per ounce.

Traders are balancing rising energy prices with weak U.S. economic data, while seeking clues about the Federal Reserve's interest rate path. High borrowing costs are a negative factor for gold, which does not yield returns.

Analysts at Morgan Stanley, including Amy Gaur, noted in a memo that "gold is struggling to establish its direction," with central bank purchases supporting prices, while exchange-traded funds sold their holdings due to concerns over interest rate hikes.

However, they see room for these funds to return to the market, given expectations that the Federal Reserve will ultimately keep interest rates unchanged this year and resume cuts next year.

Analysts expect gold to reach $4,450 per ounce, and silver to reach $65.40 per ounce by the fourth quarter.