Despite being an inflation hedge, gold struggles in an elevated interest rate environment.
Gold eased on Thursday, pressured by a stronger U.S. dollar and high Treasury yields, while stagnant peace talks in the Middle East kept oil elevated, inflation concerns alive, and reinforced bets of higher interest rates.
Tehran said it was reviewing Washington’s latest responses, and President Donald Trump suggested he could wait a few days for “the right answers” from Tehran but was also willing to resume attacks on the country.
Spot gold was down 0.6% at $4,517.94 per ounce, as of 1118 GMT. On Wednesday, bullion rose more than 1% in U.S. trading hours after having hit its lowest level since March 30.
U.S. gold futures for June delivery lost 0.4% at $4,518.70.
“No surprise that gold remains mired around the mid-$4k region, as the U.S. dollar retains much of its gains since the Middle East conflict began, while inflation woes are still palpable across global financial markets,” said Han Tan, chief market analyst at Bybit, adding that the hawkish bias in the latest FOMC minutes further limited gold’s upside.
The yellow metal has fallen more than 15% since the war began in late February, as energy-driven inflation woes forced it to adopt an inverse relationship with oil prices. The benchmark Brent crude was last up around 3% at $107.4 a barrel.
“As long as the geopolitical equation remains uncertain, gold bulls are likely to struggle to gather any upside momentum of note, especially if rate hikes loom large,” Tan added.
The dollar’s rise makes greenback-priced bullion expensive for other currency holders, while the U.S. 10-year Treasury bond yield resumed its climb, increasing the opportunity cost of holding non-yielding bullion.
Despite being an inflation hedge, gold struggles in an elevated interest rate environment.
Spot silver was down 1.4% at $74.96 per ounce, platinum lost 1% to $1,931.05 and palladium fell 0.9% to $1,357.94.
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