London: Gold prices are moving toward a weekly fall as rising oil prices and concerns about inflation reduce expectations that the United States will cut interest rates soon.
In early trading on Friday, spot gold rose slightly but remained on track for a decline this week. Market analysts say the precious metal has been under pressure as energy prices surge due to tensions in the Middle East.
Oil prices have climbed close to 100 dollars per barrel in recent days amid fears of supply disruptions linked to the conflict involving Iran and its regional rivals. Higher oil prices tend to increase inflation across the global economy. When inflation risks rise, central banks are less likely to reduce interest rates.
Investors had earlier hoped that the US Federal Reserve would start cutting interest rates this year. However, the rise in energy prices and continuing inflation concerns have weakened those expectations. Higher interest rates make gold less attractive to investors because the metal does not offer interest returns.
Another factor weighing on gold is the stronger US dollar. When the dollar gains value, gold becomes more expensive for buyers using other currencies, which can reduce demand in international markets.
Demand patterns are also mixed across major gold consuming countries. In India, dealers have reported weaker retail demand and larger discounts as high prices discourage buyers. In contrast, some investors in China are still buying gold as a safe asset amid global uncertainty.
Other precious metals have also faced pressure. Silver, platinum and palladium prices have slipped slightly as markets react to the stronger dollar and the changing outlook for interest rates.
Analysts say the gold market will closely watch upcoming US inflation data and signals from the Federal Reserve. These factors will likely shape expectations about future interest rate decisions and the direction of gold prices in the coming weeks.