ING strategists Warren Patterson and Ewa Manthey say higher Oil and gas prices are reviving inflation concerns and acting as a near-term headwind for Gold, even as geopolitical risks support haven demand. They expect upside to be capped in the short term, with volatility driven by US Federal Reserve signals, real yields and ongoing Middle East tensions.

Inflation and Fed signals weigh

"Gold started the week on a weaker footing as higher oil and gas prices reignited inflation concerns. Ongoing disruptions risk around the Strait of Hormuz are keeping energy markets supported, reinforcing inflation expectations and acting as a near-term headwind for gold."

"While gold prices have recovered some conflict-driven losses, gold still trades around 8% below pre-conflict levels following earlier liquidity-driven selling."

"We see this capping upside in the short term, though downside risks appear limited. Elevated geopolitical tensions and continued uncertainty around Hormuz should underpin haven demand."

"Attention now shifts to Tuesday’s US Senate confirmation hearing for Kevin Warsh, nominee to chair the Federal Reserve. Any hawkish signals could add further pressure on gold."

"Near-term price action is likely to remain volatile amid shifting expectations around central bank policy, real yields and persistent geopolitical uncertainty."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)