Gold Drops Below $5,000 on Inflation Fears
Get SkimNews daily
A curated daily digest across 7 categories: geopolitics, tech, finance, health, energy, sports, culture. Free.
- Spot gold fell 0.7% to $4,983.17 per ounce, with U.S. gold futures for April delivery dropping 1.5% to $4,987.30 as of 0944 GMT
- Natixis analyst Bernard Dahdah said the gold market shifted its focus from the Hormuz trade closure to longer-term inflation, warning that higher oil could push the Fed to stop cutting rates, putting downward pressure on gold
- Oil held above $100 a barrel, up more than 40% this month to its highest level since 2022, after U.S.-Israeli strikes on Iran prompted Tehran to halt shipments through the Strait of Hormuz
- President Trump on Sunday pressed allies to help secure the Strait of Hormuz as Iranian forces continued attacks on the waterway in the third week of the U.S.-Israeli war on Iran
- The Federal Reserve begins a two-day policy meeting this week and is widely expected to hold interest rates steady, with the ECB, Bank of England, and Bank of Japan also convening on inflation assessments
- UBS said central banks will be watchful of inflation risks without making 'knee-jerk policy rate hikes,' but added that a prolonged U.S.-Iran conflict should support hedging demand for gold
- Spot silver fell 2.6% to $78.46 per ounce, while platinum held steady at $2,024.85 and palladium slid 0.5% to $1,542.92
Why it matters: Gold's slide below $5,000 signals traders are repricing the rate-cut path: with oil up 40% this month and the Fed expected to hold rates steady, gold is losing its tailwind from expected easing. But UBS warns the same Iran conflict that pressured gold near-term should ultimately support hedging demand, creating a tension between inflation-driven selling and geopolitical-driven buying.
