Gold retreats as oil climbs above $100, inflation fears grow
Gold prices fall as crude oil rises above $100 a barrel, strengthening the dollar and raising concerns that the Fed may keep interest rates higher for longer
Global gold prices continued to fall as crude oil surged above $100 per barrel, fuelling concerns that inflation could rise and potentially prompt the US Federal Reserve to maintain high interest rates or even tighten policy further.
Bloomberg reported that gold prices came under pressure from a stronger US dollar and mounting inflation risks as the war in the Middle East entered its second week and oil prices climbed sharply above $100 per barrel.
Gold slipped to around $5,120 per ounce in early trading on Monday morning (March 9), marking its first weekly decline in more than a month. Major oil producers have reduced output amid the ongoing war between the United States and Israel on one side and Iran on the other, with no clear signs of the conflict easing. At the same time, the Bloomberg Dollar Spot Index rose 0.4%.
Rising crude oil prices have intensified concerns about inflation in the United States, increasing the likelihood that the Federal Reserve may keep interest rates higher for longer or even consider further increases. Higher borrowing costs and a stronger dollar typically weigh on precious metals.
Gold has also served as a source of liquidity during the recent sharp declines in global equity markets, which has added further pressure on prices in the short term.
Despite the volatile trading and slowing upward momentum, gold prices have still risen nearly 20% so far this year. Major policy shifts by the United States under President Donald Trump, which have affected global trade and geopolitics, as well as concerns over potential threats to the independence of the Federal Reserve, have continued to support demand for safe-haven assets.
The war in the Middle East has now entered its tenth day. Over the weekend, Tehran selected a new supreme leader and continued launching attacks across the Gulf region. Meanwhile, Israel struck fuel depots in Iran’s capital and threatened the Islamic Republic’s electricity network.
Attacks on energy infrastructure and disruptions to shipping through the Strait of Hormuz — a route that normally carries around 20% of the world’s oil supply — have pushed crude oil and natural gas prices significantly higher.
Market update:
Spot gold fell 0.9% to $5,124.48 per ounce as of 6:56am Singapore time. Silver dropped 1.6% to $83.22, platinum declined more than 3%, and palladium slipped 0.9%. The Bloomberg Dollar Spot Index rose 0.4% after climbing 1.3% last week.
