Gold falls again, heading for second weekly decline

Global gold prices fell on Friday (March 13) and are on track to post a second consecutive weekly decline, pressured by a stronger US dollar and rising inflation concerns stemming from the Iran conflict, which have dampened expectations for interest-rate cuts.

Reuters reported that spot gold dropped 0.5% to $5,052.15 per ounce as of 1:44 pm US Eastern Time (17:44 GMT), leaving the metal down more than 2% for the week.

US gold futures for April delivery closed 1.3% lower at $5,061.70.

“Although the market still sees gold in a long-term uptrend from an asset-allocation perspective, prices are now falling to their lowest levels since the conflict in Iran began, while the dollar is trading near a four-month high,” said Tai Wong, an independent metals trader.

The US dollar has strengthened this week, making gold — which is priced in dollars — more expensive for holders of other currencies.

Commerzbank said in a note that expectations of tighter monetary policy have been a key factor putting pressure on gold prices.

Although gold is widely viewed as a hedge against inflation and periods of uncertainty, higher interest rates tend to reduce its appeal by increasing the opportunity cost of holding the non-yielding asset.

Data also showed that US consumer spending rose slightly more than expected in January. Combined with persistent core inflation and the Middle East conflict, this has reinforced economists’ view that the Federal Reserve is unlikely to begin cutting interest rates in the near term.

US President Donald Trump said the United States would strike Iran “very hard next week” after issuing a 30-day exemption allowing the purchase of sanctioned Russian oil.

Oil prices slipped slightly but remained on track for weekly gains, as disruption in the Persian Gulf linked to the conflict continued to unsettle energy markets.

Elsewhere, the partial resumption of flights from Dubai has helped restore the flow of gold from the major global trading hub this week, according to three sources who spoke to Reuters.

Among other precious metals, spot silver fell 3.3% to $81.00.

Platinum dropped 4% to $2,047.20 and palladium declined 2.5% to $1,569.00, with both metals also heading for weekly losses.