KUALA LUMPUR, July 9 (Bernama) -- Bursa Malaysia closed lower on Thursday as renewed geopolitical tensions in West Asia weighed on investor sentiment. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 5.97 points, or 0.36 per cent, to 1,677.64 from Wednesday's close of 1,683.61. The benchmark index opened 2.62 points lower at 1,680.99, and moved between 1,676.18 and 1,683.80 throughout the session. However, market breadth was slightly positive, with gainers leading losers 533 to 504, while 547 counters were unchanged, 1,112 untraded, and 12 suspended. Turnover slipped to 2.64 billion units valued at RM2.19 billion from 2.96 billion units valued at RM2.18 billion on Wednesday.
Gold surged to a record high on Wednesday, driven by a weaker US dollar and mounting expectations for additional interest rate cuts. Investors are closely watching for signals from the Federal Reserve regarding future rate moves.
Spot gold reached US$2,670.43 per ounce earlier in the day, before settling at US$2,658.08 as of 0557 GMT. US gold futures also gained 0.2%, reaching US$2,682.10.
The US dollar eased by 0.2%, making dollar-priced gold more attractive for foreign currency holders. This comes on the heels of China’s announcement of aggressive stimulus measures, including substantial rate cuts, following the Fed's recent 50-basis-point rate cut last week. Markets are now betting on a 60% chance of another 50 bps cut in November.
Kelvin Wong, senior market analyst at OANDA, noted that China’s liquidity boost is likely to increase demand for gold from Chinese investors. He added that gold's short-term bullish trend remains strong, with potential resistance at the US$2,690 and US$2,710 levels.
Gold’s Appeal in a Low-Rate Environment
In a low-interest-rate environment, zero-yielding bullion becomes an attractive investment. However, Fed Governor Michelle Bowman cautioned that key inflation measures remain "uncomfortably above" the Fed's 2% target, signaling a careful approach to further rate reductions.
Traders are now waiting for Fed Chair Jerome Powell's remarks on Thursday and US inflation data on Friday to gain further clarity on the central bank's policy direction.
Geopolitical Tensions Add Support
Gold's rally is also being supported by rising geopolitical risks. An Israeli airstrike in Beirut killed a senior Hezbollah commander on Tuesday, increasing fears of a full-scale war as cross-border tensions escalate.
Additionally, analysts predict further inflows into gold exchange-traded funds (ETFs), particularly from Western investors, which will continue to provide upward pressure on gold prices.
In contrast, silver dropped 0.9% to US$31.85 per ounce, while platinum and palladium were down 0.4% and 1.3%, respectively.
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