Gold prices head for weekly decline following rising inflation fears
Shafaq News
Gold prices fell in thin trading on Friday, and were set for a weekly decline, pressured by higher oil prices that have stoked inflation fears and lifted expectations that interest rates will stay higher for longer — a headwind for non-yielding assets.
Spot gold was down 0.6% to $4,592.99 per ounce at 0655 GMT, and was on track for a weekly loss of about 2.4%, after dropping to a one-month low on Wednesday. U.S. gold futures for June delivery dipped 0.5% to $4,604.50.
Trading volumes were light as financial markets in top gold consumers China and India were closed for public holidays.
"What we're seeing now is essentially the dominant war trade narrative, once again reasserting itself after a day's correction," said Ilya Spivak, head of global macro at Tastylive, noting that gold is back down, and oil back up.
Geopolitical tensions remained in focus after Iran said on Thursday it would respond with "long and painful strikes" on U.S. positions if Washington renewed attacks, reiterating its claim to the Strait of Hormuz.
Brent crude prices held above $110 a barrel as efforts to resolve the conflict stalled.
U.S. inflation accelerated in March as the war raised gasoline prices, reinforcing expectations that the Federal Reserve could keep interest rates on hold well into next year.
Global brokerages have also gradually pared back earlier expectations of two U.S. rate cuts in 2026, with forecasts now split between modest easing and no cuts, amid persistent inflation risks and cautious policymakers.
The European Central Bank and the Bank of England kept interest rates unchanged on Thursday, following similar decisions earlier in the week by the Fed and the Bank of Japan, though all signalled inflation concerns.
While gold is traditionally seen as a hedge against inflation, elevated interest rates aimed at curbing price pressures tend to weigh on demand for the non-yielding metal.
In other metals, spot silver rose 0.5% to $73.37 per ounce, platinum eased 0.7% to $1,972.32 and palladium inched down 0.1% to $1,523.
(REUTERS)
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