Gold Prices Struggle Below Key Levels Amid Rate Uncertainty
Gold prices edged slightly higher in Asian trading on Thursday but remained well below key resistance levels. Ongoing uncertainty around interest rates and inflation linked to the U.S.-Israel conflict with Iran continued to weigh on the metal’s safe-haven appeal.
Spot gold rose 0.2% to $4,833.60 per ounce, while gold futures slipped 1.3% to $4,834.04 per ounce, reflecting mixed market sentiment.
Strong U.S. Inflation Data and Fed Outlook Pressure Gold
Gold came under significant pressure after stronger-than-expected U.S. producer price index (PPI) data and a cautious Federal Reserve outlook. Prices fell sharply on Wednesday, dropping below the crucial $5,000 per ounce level and hitting their lowest point in over a month.
The Federal Reserve held interest rates steady but flagged uncertainty around inflation, particularly due to rising energy prices linked to geopolitical tensions.
Markets now expect the central bank to delay any potential rate cuts, with expectations shifting toward September at the earliest. This outlook has reduced gold’s attractiveness, as higher interest rates tend to weigh on non-yielding assets like gold.
Safe-Haven Demand Offset by Rising Yields
Despite ongoing geopolitical risks, gold has struggled to gain momentum. Safe-haven demand driven by the Iran conflict has been largely offset by rising U.S. real yields and a stronger dollar.
Analysts note that markets are currently more focused on inflation risks and the Federal Reserve’s policy path than on geopolitical hedging. As a result, gold has failed to sustain upward momentum in recent sessions.
Other Precious Metals Extend Losses
Other precious metals also declined, extending losses from the previous session. Platinum fell 0.6% to $2,012.68 per ounce, while silver dropped 0.7% to $74.83 per ounce.
Like gold, both metals have underperformed since late February amid shifting macroeconomic conditions.
Oil Price Surge Adds Inflation Pressure
Gold has also lagged behind rising oil prices, which have surged due to escalating tensions in the Middle East. The conflict intensified after attacks on key energy infrastructure, raising fears of prolonged supply disruptions.
Higher oil and gas prices have fueled concerns about global inflation, especially as disruptions in the Strait of Hormuz and regional energy production persist.
This environment has strengthened expectations of prolonged tight monetary policy, which typically weighs on gold prices.
Central Bank Decisions in Focus
In addition to the Federal Reserve, several major central banks are in focus. The Bank of Japan has already kept interest rates unchanged, while the European Central Bank, Bank of England, and Swiss National Bank are set to announce their policy decisions later in the day.
Future movements in gold prices are likely to depend on shifts in the U.S. dollar, real yields, and expectations for monetary easing.
