GOLD fell for a seventh consecutive session as escalating conflict in the Middle East drove oil prices higher and dimmed prospects for a near-term US interest rate cut, said Bloomberg News on Thursday.
Spot gold fell 2.4% to $4,704.32 an ounce in London trading, reversing an earlier gain of 1% and extending its longest losing streak since October 2023, said the newswire. Silver slid 5.1% to $71.54, with platinum and palladium also declining.
Rising crude and gas prices are stoking inflationary risks, reducing the likelihood of rate cuts by the Federal Reserve and other central banks. Gold, which pays no interest, is particularly sensitive to rate expectations. A stronger dollar has added further pressure on commodities.
The Fed held rates steady at its latest meeting and projected just one cut this year. Chair Jerome Powell said a reduction would require a slowdown in inflation, and noted that the conflict made the economic outlook “uncertain.”
Gold’s retreat mirrors its decline in the summer of 2022, when Russia’s invasion of Ukraine triggered an energy price shock that rattled global markets, said the newswire.
Despite the recent selloff, bullion remains around 9% higher for the year after hitting an all-time high above $5,595/oz in late January. Since the outbreak of war on February 28, however, it has shed nearly 9%.
“It’s not a safe haven anymore, it’s a speculative asset,” said Patrick Armstrong, chief investment officer of Plurimi Wealth.
“Dollar strength and broader tightening pressures present an uncertain near-term pathway for gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery Australia. “But if inflation rises faster than policy rates, falling real rates may help gold in the medium term.”
