Spot Gold retreated to an over 1-week low on Friday, as elevated oil prices kept inflation concerns alive and reinforced expectations of more hawkish central bank policy settings.
The US Dollar surged to a 3-week high, 10-year US Treasury yields went up to a near one-year high, while Brent prices held above $107 per barrel, as the Strait of Hormuz remained closed, leading to tight energy supplies.
“Gold is getting hit from all sides – rising oil has brought inflation back to the forefront, pushing yields higher and the dollar stronger, leaving the yellow metal as the unfortunate victim of the market’s renewed rate-cut scepticism,” Tim Waterer, chief market analyst at KCM Trade, was quoted as saying by Reuters.
Elevated energy costs have added to global inflation expectations and kept central bank policy makers wary of adopting a more dovish stance. In turn, the reduced probability of near-term interest rate cuts by central banks weighed on non-interest-bearing Gold.
Traders have largely priced out Fed interest rate cuts for 2026, while the probability of a hike by December stood at 30%.
Meanwhile, market focus set on the outcome of the summit between US President Donald Trump and Chinese President Xi Jinping. According to media reports, the United States and China are examining a potential framework that would reduce tariffs on approximately $30 billion of goods, excluding items linked to national security.
Trump is also expected to seek assistance from China to resolve the prolonged conflict with Iran.
Spot Gold was last down 1.74% on the day to trade at $4,571.52 per troy ounce.
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