Gold prices slid for a second straight session on Thursday, dropping below $5,170 per ounce as surging oil prices intensified inflation fears and reduced the likelihood of near‑term interest rate cuts by major central banks.
Bullion came under pressure from upward moves in energy markets, where sustained supply concerns tied to the conflict in the Middle East have pushed crude prices sharply higher, keeping inflation risks elevated. At the same time, a rallying U.S. dollar and rising Treasury yields weighed on gold’s appeal as a non‑yielding asset.
Market participants have priced in fewer rate cuts from the Federal Reserve this year amid forward‑looking inflation concerns, with forecasts currently implying only one reduction later in 2026, a shift from earlier expectations for more aggressive easing.
A stronger dollar typically makes gold more expensive for holders of other currencies, contributing to downward pressure on prices. Thursday’s move also came as data showed U.S. core inflation remained tame at the start of the year, while the European Union warned that inflation could exceed 3 per cent across the bloc this year, further complicating global monetary policy outlooks.
Rising oil prices are a central part of the story. Heightened geopolitical tensions in the Middle East have tightened global energy supply, pushing crude benchmarks sharply higher and reawakening inflation concerns. Even a record coordinated release of 400 million barrels of emergency oil reserves by the International Energy Agency was viewed by markets as insufficient to offset the risk of prolonged supply disruptions.
“The firming of oil prices has revived inflation expectations, strengthening the dollar and reducing the prospects for imminent rate cuts,” analysts said, noting that higher yields and dollar strength typically dampen demand for gold.
Gold’s retreat this week reflects the growing challenge for the safe‑haven asset as markets juggle geopolitical risk, inflation expectations and shifting monetary policy bets. However, gold still retains safe‑haven appeal amid ongoing uncertainties, and some traders expect further volatility as markets respond to evolving geopolitical, inflation and central bank developments.
