BY COMFORT OGBONNA
Gold prices declined on Thursday as a stronger U.S. dollar and fading expectations for near-term interest rate cuts in the United States reduced investor demand for the precious metal. Rising energy prices, driven by escalating tensions in the Middle East, have increased inflation concerns and complicated the outlook for monetary policy.
Spot gold dropped 0.4% to $5,153.79 per ounce as of 05:45 GMT. U.S. gold futures for April delivery also slipped 0.4%, trading at $5,159.20.
The U.S. dollar strengthened by about 0.2%, making gold — which is priced in dollars — more expensive for investors holding other currencies. This currency movement often puts pressure on gold demand in international markets.
Market analysts say the stronger dollar and shifting interest rate expectations are creating short-term obstacles for gold prices, even as geopolitical tensions would normally boost demand for safe-haven assets.
Nicholas Frappell, global head of institutional markets at ABC Refinery, noted that the strength of the U.S. dollar and the evolving interest-rate outlook are slightly weighing on gold, despite ongoing geopolitical instability that would typically support the metal’s value.
Tensions in the Middle East have intensified after Iran warned that oil prices could surge to $200 per barrel following attacks on merchant ships earlier this week. At the same time, the International Energy Agency has called for a major release of strategic oil reserves in an attempt to reduce the impact of one of the most severe energy shocks since the 1970s.
Oil prices have surged above $100 per barrel as attacks on oil and transportation infrastructure continue across the region. The spike in energy costs is adding further pressure to global inflation, complicating economic forecasts.
Sources also report that Iran has deployed roughly a dozen naval mines in the Strait of Hormuz, a key maritime route for global oil and liquefied natural gas shipments. The move has heightened concerns about shipping disruptions in one of the world’s most important energy corridors.
Several tankers have remained stranded in the strait for more than a week, while some producers have temporarily suspended output as storage facilities approach capacity.
Adding to the economic uncertainty, Goldman Sachs has revised its forecast for U.S. Federal Reserve interest rate cuts. The investment bank now expects quarter-point reductions in September and December rather than earlier in the year, citing rising inflation risks linked to the Middle East conflict.
Recent U.S. economic data also contributed to market caution. The Consumer Price Index increased by 0.3% in February, matching forecasts and accelerating from January’s 0.2% rise. On an annual basis, inflation reached 2.4% in February, also in line with expectations.
Investors are now waiting for the release of January’s delayed Personal Consumption Expenditures index on Friday, a key inflation indicator closely monitored by policymakers when assessing interest rate decisions.
In other precious metals, spot silver declined 0.5% to $85.33 per ounce, platinum dropped 0.3% to $2,162.24, while palladium edged up 0.3% to $1,642.05.
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