Gold slips to one-week low as oil-driven rate fears lift US yields
- Spot gold extended losses for a fourth consecutive session, and was down 1.5% at $4,579.19 per ounce
Gold slipped to a one-week low on Friday, as elevated oil prices stoked inflation fears, boosting interest rate expectations and sending U.S. Treasury yields near one-year highs.
Spot gold extended losses for a fourth consecutive session, and was down 1.5% at $4,579.19 per ounce by 0631 GMT, its lowest point since May 6. Bullion has lost nearly 3% so far this week.
U.S. gold futures for June delivery lost 2.2% to $4,582.60.
Benchmark 10-year U.S. Treasury yields rose to a near one-year high, increasing the opportunity cost of holding gold.
“Gold is getting hit from all sides - rising oil has brought inflation back to the forefront, pushing yields higher and the dollar stronger, leaving the yellow metal as the unfortunate victim of the market’s renewed rate-cut scepticism,” said Tim Waterer, chief market analyst at KCM Trade.
The dollar has gained more than 1% so far this week, making greenback-priced bullion expensive for holders of other currencies.
Brent crude oil prices were up 6.2% this week, hovering above $106 a barrel, as the Iran war drags on, keeping the key Strait of Hormuz largely shut.
Gold prices have dropped more than 13% since the U.S.-Iran conflict erupted on February 28.
A series of inflation reports this week showed the risk that rising energy costs could metastasize to other goods and services, dimming hopes for near-term U.S. rate cuts.
Traders have largely priced out U.S. interest rate cuts this year, with markets anticipating a 39% chance of a hike by December, according to CME Group’s FedWatch tool.
While gold is seen as a hedge against inflation, high rates tend to weigh on the non-yielding asset.
On the geopolitical front, U.S. President Donald Trump entered his final talks with China President Xi Jinping on Friday touting economic wins that gave markets little to cheer.
Meanwhile, gold discounts in India jumped to a record this week as a sharp import duty hike slowed demand and triggered investor selling, while investment demand kept Chinese premiums firm.
Spot silver fell 5.9% to $78.53 per ounce, platinum lost 2.4% to $2,006.03, and palladium was down 0.7% at $1,426.86.
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