Gold falls as stronger dollar and rate fears weigh
Gold fell to $4,651.35 today as Trump's remarks on Iran boosted the dollar. Rising oil prices and inflation concerns are driving expectations for higher rates.
Gold prices retreated on Thursday as a strengthening United States dollar and rising energy costs dampened the appeal of the precious metal. The market reacted to statements from the White House regarding ongoing military actions in Iran, which stoked inflation fears and reinforced expectations that interest rates will remain elevated for longer than previously anticipated.
Spot gold declined 2.2% to $4,651.35 per ounce by mid-afternoon, falling from a two-week high reached earlier in the day. Meanwhile, gold futures in the U.S. settled down 2.8% at $4,679.70. The sharp rise in the dollar has made bullion more expensive for international buyers, further weighing on prices.
"The market is very focused on Trump's comments, which so far offer little sign of a quick resolution to the energy situation," said David Meger, director of metals trading at High Ridge Futures.
"This is weighing on gold and Silver prices, as there is less likelihood of rate cuts," he added.
The geopolitical tension follows a televised address where Donald Trump stated that military objectives in the Middle East were nearly complete, yet no specific timeline for a withdrawal was provided. This uncertainty caused oil prices to climb, as higher energy costs typically lead to broader inflationary pressures. While gold is often viewed as a hedge against inflation, its lack of yield makes it less attractive when interest rates are high or rising. Since the start of the regional conflict on February 28, spot gold has seen a total decline of 12%.
Market sentiment was also influenced by data from Turkey, where central bank gold reserves fell by 69.1 metric tons last week to a total of 702.5 tons. This marks a decrease of more than 118 tons over the past fortnight as local authorities attempt to manage the economic impact of the war.
In physical markets, demand showed signs of recovery in India, where gold traded at a premium for the first time in two months due to lower prices. In China, however, premiums saw a slight decline as investors waited for further price corrections before entering the market.
Among other precious metals, silver fell 3.7% to $72.38 per ounce. In contrast, Platinum gained 0.9% to reach $1,981.95, and Palladium rose 1.9% to $1,497.00.
