Gold Plunges to Second Weekly Drop Amid Rising Oil Costs
Global bullion markets are experiencing their second consecutive week of declines despite ongoing US-Iran military tensions, as the strengthening dollar dampens demand for safe-haven assets. Spot gold retreated by 1% internationally after trading above $5,098 per ounce on Thursday to settle near levels below $5,243 an ounce following Friday's session where it fell approximately Rs 76 against a weaker rupee trend in India.
Key Points
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1Gold prices fell despite escalating US-Iran war tensions and high oil costs due to profit-taking by investors after recent record highs.
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2The strengthening United States dollar contributed significantly to the decline in both international spot rates (near $5,100/ounce) and Indian market futures priced at Rs 160k per gram.
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3[Gold is currently on track for its second consecutive weekly drop as rising energy prices reduce expectations of near-term US interest rate cuts.
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4Silver also dipped marginally alongside gold amid the same combination of profit booking pressures and a firmer dollar.
Developments
Gold prices fell by Rs 1,904 on Friday due to global market weakness driven by rising crude oil costs and geopolitical tensions in West Asia that strengthened the dollar index above 100 points. Analysts attribute this decline primarily to higher US Treasury yields at 4.27 per cent and fears of delayed Federal Reserve interest rate cuts caused by inflation projections, leading a moderately bearish outlook for gold traders on MCX contracts April delivery was down Rs 685 from Thursday
Gold prices declined by up to 1.2% on Friday as a strengthening dollar offset rising oil and gas costs driven by the Middle East conflict. Consequently, market expectations for Federal Reserve interest rate cuts have virtually vanished due to fears that sustained inflationary pressure will delay monetary easing despite higher borrowing rates negatively impacting precious metals without yield compensation.
Gold and silver prices dipped marginally on Friday as profit-taking occurred after recent record highs amid a strengthening US dollar; however, the decline was capped by safe-haven demand driven by ongoing tensions between Iran and Israel rising energy costs that supported underlying bullion. Analysts noted these geopolitical factors fueled higher inflation concerns while global equity weakness contributed to pressure in gold prices despite its broader bullish framework remaining intact.
Gold rose 0.8% at $5,118 per ounce on Friday driven by a weaker dollar and lower U.S. Treasury yields but faced headwinds from rising energy prices that dimmed prospects for near-term interest rate cuts while spot bullion lost roughly 1% this week amid geopolitical tensions in the Middle East involving Iran's threat to close strategic oil routes, causing crude prices to exceed $100 per barrel and fueling inflation fears.