Gold prices remained under pressure on Thursday as investors focused on the inflationary impact of rising energy prices rather than the latest easing in US inflation, reinforcing expectations that the Federal Reserve will remain cautious over future interest-rate decisions.
At 04:42 ET (08:42 GMT), spot gold (XAU/USD) was down 0.7% at US$4,032.37 an ounce, while gold futures slipped 0.4% to US$4,037.10. Silver (XAG/USD) declined 1.48% to US$56.92 an ounce and platinum (XPT/USD) lost 1.11% to US$1,659.20.
Oil rally clouds inflation outlook
Although recent US inflation reports showed producer and consumer price pressures easing, markets remained more concerned about the impact of rising crude oil prices.
The latest increase in energy prices followed renewed military action in the Middle East, raising concerns that fuel costs could once again feed into broader inflation and delay any future easing of monetary policy.
Normally, weaker inflation would support gold by reducing expectations for higher interest rates and weighing on the US dollar. However, the oil rally has prompted investors to question whether the recent disinflation trend will continue.
Federal Reserve keeps policy options open
Federal Reserve Chair Kevin Warsh said policymakers remain committed to bringing inflation back to the central bank’s 2% target and stand ready to adjust interest rates if inflation proves more persistent than expected.
He also argued that investment in artificial intelligence alone is unlikely to create widespread inflationary pressures.
Federal Reserve Governor Lisa Cook echoed the cautious stance, saying further action could be required if inflation remains elevated, while New York Fed President John Williams described current interest rates as “well positioned” to guide inflation back towards target.
Geopolitical risks continue to support oil
Markets also remained focused on developments in the Middle East.
The United States carried out another day of strikes against Iranian targets, while President Donald Trump reiterated that military operations would continue until attacks on commercial shipping ceased and the Strait of Hormuz reopened.
Higher oil prices continue to pose a challenge for policymakers by increasing the risk that inflation remains above target, potentially supporting Treasury yields and the US dollar while reducing the appeal of non-yielding assets such as gold.
ANZ said the key issue for investors is whether the Federal Reserve interprets the latest rise in oil prices as a temporary supply disruption or the beginning of a broader inflationary trend.
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