Gold heads for weekly loss on oil-driven inflation concerns

GOLD was steady in thin trading on Friday, but was on course for a weekly decline as higher oil prices fuelled inflation worries and expectations of higher-for-longer interest rates.

Spot gold was steady at US$4,620.57 per ounce, as of 0248 GMT, but was on track for a weekly loss of 1.8 per cent, having dropped to a one-month low on Wednesday. US gold futures for June delivery rose 0.1 per cent to US$4,632.70.

“In the Asian session, the market is going to be quite thin because of public holidays, so we’re really in a bit of a crossroads, or at least waiting for the next catalyst to make more of a directional move,” said Kyle Rodda, a senior financial market analyst at Capital.com.

Financial markets in the top gold consumers, China and India, are closed for the holiday. Iran said on Thursday it would respond with “long and painful strikes” on US positions if Washington renewed attacks and restated its claim to the Strait of Hormuz.

Brent oil prices held firm above US$110 a barrel as efforts to resolve the Iran conflict have hit an impasse.

US inflation accelerated in March as the Iran war raised petrol prices, reinforcing expectations that the Federal Reserve could keep interest rates on hold well into next year.

Global brokerages have also gradually stepped back from earlier expectations of two US rate cuts in 2026, with forecasts now split between some easing and none due to lingering inflation risks and cautious policymakers.

The European Central Bank and the Bank of England also kept interest rates unchanged on Thursday following holds earlier in the week by the Fed and the Bank of Japan, though all signalled concerns about inflation.

While gold is traditionally seen as a hedge against inflation, elevated interest rates aimed at controlling price pressures weigh on its appeal as a non-yielding asset.

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In other metals, spot silver rose 0.5 per cent to US$74.13 per ounce, platinum slipped 0.3 per cent to US$1,980.15, and palladium was up 0.2 per cent at US$1,527.29. REUTERS