Gold Set for Weekly Drop as Middle East War Keeps Oil Near $100
Gold steadied on Friday but remained on course for a second consecutive weekly decline, as the Middle East war kept oil trading near $100 a barrel and reinforced global inflation concerns. Bullion edged up toward $5,100 an ounce even as the dollar strengthened, while crude held on to Thursday’s rally. In another bid to cool energy prices, the White House authorized buyers to take Russian oil cargoes already at sea.
Gold is down about 1.6% this week, which would mark the first time since November that the metal has posted at least two straight weekly declines. The rally that dominated earlier months has lost momentum since the US-Israeli war with Iran began nearly two weeks ago, with no clear path to de-escalation.
On Thursday, the 13th day of the conflict, US President Donald Trump and Iran’s new supreme leader, Mojtaba Khamenei, struck defiant tones. The war has effectively blocked shipping through the Strait of Hormuz and triggered what was described as the biggest disruption to global oil markets on record, keeping energy risk premiums elevated.
For gold, higher energy prices and mounting inflation worries have sharply reduced expectations that the Federal Reserve and other central banks will cut interest rates. The latest US jobless report, showing new claims remained subdued, further diminished the case for lower borrowing costs. Traders now see virtually no chance of a rate cut at next week’s Fed meeting and only an 80% probability of a reduction later this year. Higher rates typically weigh on precious metals, which do not pay interest.
The International Energy Agency said on Thursday that the war is generating an unprecedented supply disruption in oil markets, a day after member states agreed to release a record 400 million barrels from emergency reserves. Even so, gold remains up around 18% year-to-date and has largely held above the $5,000-an-ounce threshold.
UBS Global Wealth Management said it views gold less as a direct hedge against the Middle East conflict—arguing oil is the better hedge—and more as protection against the monetary and financial effects wars can create. Those effects, UBS noted, may include lower real interest rates, concerns about currency debasement, or heightened worries over elevated levels of government debt.
Spot gold rose 0.2% to $5,090.43 an ounce as of 10:07 a.m. in London. Silver fell 1.2% to $82.87 an ounce, while platinum and palladium also declined. The Bloomberg Dollar Spot Index was on track for a 0.8% weekly gain.
Source : Newsmaker.id
