Noida, Apr 23 (APAC Media): Gold declined in volatile trading on Thursday as rising oil prices heightened concerns about inflation and the likelihood of interest rates staying higher for longer, while investors awaited clearer signals on the stalled US-Iran peace talks.
Spot gold slipped 0.7% to $4,705.09 per ounce as of 0215 GMT, while U.S. gold futures for June delivery declined 0.6% to $4,722.10.
Brent crude oil stayed above $100 per barrel, buoyed by larger-than-expected draws in U.S. gasoline and distillate inventories, along with stalled progress in peace negotiations.
“The return of Brent oil to triple-digit levels is keeping inflation concerns in focus and weighing on gold today,” said Tim Waterer, chief market analyst at KCM Trade.
Higher crude oil prices can fuel inflation by increasing transportation and production costs, which in turn raises the likelihood of interest rates remaining elevated.
Although gold is seen as an inflation hedge, higher interest rates increase the appeal of yield-bearing assets, reducing the attractiveness of bullion.
Iran seized two ships in the Strait of Hormuz on Wednesday, tightening its control over the strategic waterway after U.S. President Donald Trump called off planned attacks, with no indication that peace talks would resume.
Trump maintained the U.S. Navy blockade of Iranian maritime trade, while Iran’s parliament speaker and chief negotiator, Mohammad Baqer Qalibaf, stated that a full ceasefire would only be possible if the blockade were lifted.
Spot silver declined 1.4% to $76.64 per ounce, platinum slipped 1.3% to $2,048.25, and palladium fell 1% to $1,529.25.
“Investors are concerned that this ‘ceasefire-plus-blockade’ situation could persist for months, turning a short-term surge into a prolonged inflationary pressure that could weigh on gold due to yield considerations,” said Waterer.
Meanwhile, a Reuters poll of economists indicated that the U.S. Federal Reserve is likely to wait at least six months before cutting interest rates this year, as war-driven energy shocks further fuel already elevated inflation.
Traders are now pricing in a 23% chance of a 25-basis-point Fed rate cut in December, down from 28% a week earlier. Before the conflict, markets had expected two rate cuts this year.
News Agency Inputs
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