SINGAPORE: Gold recovered some ground after sliding nearly 4% on Wednesday, with dip-buyers helping the metal to withstand spiking oil prices and inflationary risks from the war in the Middle East.
Bullion rose as much as 0.7%, reversing some losses sustained over six straight days of decline – the longest losing streak since late 2024.
Oil advanced yesterday after Iran and Israel traded strikes on some of the most important energy facilities in the Persian Gulf region.
Nearly three weeks into the war, soaring crude and gas prices are raising inflationary risks, which make rate cuts by the Federal Reserve (Fed) and other central banks less likely. This is a headwind for gold, which doesn’t pay interest.
A stronger dollar has also weighed on commodities priced in the US currency.
“Dollar strength and broader tightening pressures across developed-market central banks present an uncertain near-term pathway for gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.
“But if inflation rises faster than policy rates, falling real rates may help gold in the medium term.”
Bullion is still up around 12% so far this year, though upward momentum has stalled in recent weeks as prospects for a near-term rate cut have faded and some investors sold the metal to meet margin calls elsewhere in their portfolios.
Bullion hit an all-time high above US$5,595 an ounce in late January; from the beginning of the war on Feb 28 to Wednesday’s close, it fell nearly 9%.
After the latest Fed meeting, Powell also made rare statements about his future at the US central bank in the wake of an investigation by the Department of Justice. He said he had no intention of resigning as a governor until the probe is complete.
Spot gold rose 0.4% to US$4,835.55 an ounce at 9:21am in Singapore.
Silver edged up 0.2% to US$75.49. Platinum was little changed, while palladium advanced.
The Bloomberg Dollar Spot Index slipped 0.1% after gaining 0.5% in the previous session. — Bloomberg
