KUALA LUMPUR, May 22 (Bernama) -- Bursa Malaysia ended higher on Friday as bargain hunting resurfaced following several weak trading sessions. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.31 points, or 0.25 per cent, to 1,712.67, from yesterday’s close of 1,708.36. The benchmark index, which opened 3.35 points higher at 1,711.71, moved in a narrow range between 1,710.30 and 1,715.71 throughout the session. Market breadth was positive, with gainers outpacing losers 629 to 539, while 540 counters were unchanged, 1,010 untraded and 64 suspended. Turnover rose to 3.68 billion units worth RM3.58 billion compared with 3.49 billion units worth RM3.70 billion on Thursday.
Gold prices edged lower as a stronger US dollar and rising expectations of interest rate hikes reduced the appeal of the non-yielding metal.
Gold Under Pressure from Dollar Strength
Spot gold declined 0.3% to US$4,527 per ounce, extending a modest weekly loss.
The weakness comes as the US dollar holds near a six-week high, making gold:
- More expensive for foreign investors
- Less attractive relative to yield-bearing assets
Rising Rate Expectations Weigh on Sentiment
Markets are increasingly pricing in tighter monetary policy:
- ~60% probability of a Fed rate hike by December
Elevated oil prices are fueling inflation concerns, which may force the Federal Reserve to keep rates higher for longer.
Higher interest rates typically:
- Increase opportunity cost of holding gold
- Strengthen the US dollar, further pressuring prices
Oil and Geopolitics Drive Inflation Risks
Oil prices remain elevated amid uncertainty in US-Iran negotiations, particularly around:
- Uranium policy disputes
- Control of the Strait of Hormuz
This keeps inflation risks elevated, complicating the Fed’s policy outlook.
Safe-Haven Demand Fails to Offset Headwinds
Despite geopolitical tensions, gold has seen limited safe-haven inflows, as:
- Higher yields dominate market dynamics
- Investors prefer cash and dollar-denominated assets
Other Precious Metals Mixed
- Silver -0.2% (still on track for weekly gain)
- Platinum -0.5%
- Palladium -0.2%
Investor Takeaways
- Gold prices are under pressure from a stronger dollar and rising yields.
- Markets are pricing in a Fed rate hike (~60% probability).
- Higher oil prices are driving inflation concerns, impacting monetary policy.
- Safe-haven demand for gold remains muted despite geopolitical risks.
- Investors should monitor Fed policy signals, dollar strength, and oil prices.
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