Gold drops amid stronger dollar and rate concerns

Gold prices declined as a stronger US dollar and concerns about higher interest rates weighed on the precious metal, while the war in the Middle East entered its second week and oil prices surged toward $120 a barrel.

Bullion fell by as much as 3 percent to around $5,015 per ounce, following its first weekly decline in more than a month, before trimming some of the losses, News.Az reports, citing Bloomberg.

Major oil and gas producers in the Persian Gulf region have curbed output as the US-Israeli war with Iran shows no signs of easing, while the US dollar strengthened against all major currencies. A gauge tracking the US currency rose by as much as 0.7 percent.

Gold has come under pressure as surging crude prices fuel inflation concerns in the United States, increasing expectations that the Federal Reserve may keep interest rates higher for longer or potentially raise them further. Higher borrowing costs and a stronger dollar typically weigh on precious metals, which do not generate interest income. Gold has also been used as a source of liquidity as global equity markets face a deepening sell-off.

The conflict in the Middle East has now entered its 10th day. Over the weekend, Tehran appointed a new supreme leader while continuing attacks across the Persian Gulf region. Meanwhile, Israel targeted fuel depots in the Iranian capital and warned it could strike the country’s power grid. Attacks on energy infrastructure and a halt to shipping through the Strait of Hormuz—which normally carries about one-fifth of the world’s oil—have pushed crude and natural gas prices higher.

Spot gold fell 1.6 percent to $5,091.06 per ounce as of 11:59 a.m. in Singapore. Silver dropped 1.7 percent to $83.11, platinum declined 2.2 percent, and palladium slipped 0.8 percent. The Bloomberg Dollar Spot Index rose 0.6 percent after gaining 1.3 percent last week.

News.Az 

By Nijat Babayev