Gold Heads for Second Weekly Decline as Dollar Strengthens and Oil Rises
Gold prices edged higher on Friday, but remained on track for a second straight weekly decline, as the dollar strengthened and oil prices continued to rally amid the Middle East conflict. Bullion briefly held above US$5,100 an ounce, but is still down more than 1% on the week.
The main pressure comes from a combination of a stronger dollar and changing interest rate expectations. The Bloomberg Dollar Index is up about 0.4% this week. At the same time, surging energy prices have heightened inflation concerns, which in turn has dampened expectations of interest rate cuts by the Federal Reserve and other central banks.
The latest US jobless claims data, which remained relatively low, reinforced the perception that monetary policy easing is not urgent. US Treasury bonds fell on Thursday, pushing short-term yields to their highest level since August. Market participants now see little chance of a rate cut at next week's Fed meeting, and only about a 70% chance of one this year. Rising borrowing costs are generally negative for gold because it does not yield interest.
The US-Israel war with Iran has also changed the dynamics of gold's safe haven in the past two weeks. Gold trading has tended to be choppy, with some investors selling to cover margin calls on other assets. Nevertheless, gold is still up around 18% year-to-date and has remained relatively above the US$5,000 per ounce threshold.
The next major risk is if a prolonged conflict keeps oil prices high, as it could amplify inflationary pressures and keep interest rates high for longer, adding to the burden on precious metals. The International Energy Agency said the war triggered the largest supply disruption in the history of the global oil market, while its members agreed to release a record 400 million barrels of emergency reserves.
At 8:05 a.m. in Singapore, spot gold rose 0.4% to US$5,099.98 per ounce. Silver rose 0.4% to US$84.18, while platinum and palladium also strengthened. Looking ahead, the market is monitoring the direction of the dollar, movements in US yields ahead of the Fed meeting, as well as developments in the conflict and their impact on energy prices and inflation expectations. (asd)
Source: Newsmaker.id
