Gold prices fell on Thursday, pressured by a firmer US dollar and fading expectations of near-term interest-rate cuts as rising energy prices fuel inflation concerns.
Spot gold was down 0.4% at $5,153.79 per ounce as of 05:45 GMT, while US gold futures for April delivery slipped 0.4% to $5,159.20. The strengthening dollar, up 0.2%, made dollar-denominated bullion more expensive for international buyers, contributing to the decline.
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“I think the USD strength and interrelated rates story is a slight headwind for gold despite the actual violence that’s taking place, which is otherwise supportive of gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
Meanwhile, oil prices surged above $100 a barrel as Iran escalated attacks on merchant ships and energy facilities across the Middle East. Iran’s military warned of oil prices potentially reaching $200 a barrel, while the International Energy Agency (IEA) urged the release of strategic reserves to counter a potential energy crisis. The deployment of mines in the Strait of Hormuz has stranded tankers for over a week, with producers halting output as storage nears capacity.
Rising energy costs have heightened inflation risks, prompting Goldman Sachs to delay its forecast for US Federal Reserve rate cuts, now expecting quarter-point reductions only in September and December. Economic data showed the US consumer price index (CPI) rose 0.3% in February, accelerating from January’s 0.2% gain, with a year-on-year increase of 2.4%, in line with expectations. Investors are now awaiting the release of the January Personal Consumption Expenditures index on Friday.
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Other precious metals also saw movements: spot silver fell 0.5% to $85.33 per ounce, platinum dropped 0.3% to $2,162.24, while palladium edged higher by 0.3% to $1,642.05.
Market watchers said bullion may remain under pressure as the dollar strengthens and inflationary pressures persist, even amid geopolitical uncertainty in the Middle East.