Gold prices opened shakily at the start of the week nearing $4,650 as the asset struggles with a surge in energy prices that could spark inflation risks and dampen expectations that the Fed will ease interest rates.
At 10 a.m., gold prices were at $4,723, down 0.54% since they opened early Monday in Asian trading.
West Texas Intermediate (WTI) crude oil prices started the week with a sharp jump when they opened with a gap of around 8.5%, trading at nearly $98 a barrel early in the session.
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The sharp increase reflects market concerns about global supply risks following the resurgence of geopolitical tensions.
The surge in oil prices was driven primarily by the latest developments in the conflict between the United States and Iran. These tensions increase the risk of disruption to the world's main oil supply routes, thus pushing the commodity prices higher in the short term.
The United States is reportedly set to begin restricting the movement of ships entering and leaving the Strait of Hormuz after peace talks between the two countries failed to reach an agreement.
This action is expected to have a direct impact on global oil trade flows as the route is one of the most important in the world.
At the same time, the US Central Command (CENTCOM) announced that restrictions on maritime traffic to and from Iranian ports will begin to be implemented according to the set schedule. This move has the potential to further increase pressure on the global energy supply chain.
Meanwhile, higher-than-expected US Consumer Price Index (CPI) data continues to support the Fed's tight monetary policy stance.
Annual inflation rose to 3.3% in March compared to 2.4% previously, while the monthly reading jumped to 0.9%. The core CPI recorded a modest increase of 0.2% month-on-month and 2.6% year-on-year, reinforcing expectations that interest rates will remain high for an extended period.
