London: Gold prices edged lower on Monday as rising energy prices reduced hopes that major central banks will cut interest rates soon. The precious metal had earlier dropped nearly one percent during trading before recovering slightly.
Spot gold was trading at around 5020 dollars per ounce, while US gold futures were close to 5024 dollars per ounce. Although prices fell during the session, gold continued to remain near historically high levels.
Market analysts said the main pressure on gold came from the sharp rise in oil prices. Energy prices have increased amid growing tensions in the Middle East and fears that the conflict could disrupt global oil supply. Higher oil prices often increase inflation concerns and make central banks more cautious about reducing interest rates.
When interest rates remain high, gold becomes less attractive to investors because it does not provide interest like bonds or savings instruments. As a result, expectations that interest rate cuts may be delayed have weighed on gold prices.
However, the decline in gold was limited as investors continued to watch global tensions and economic uncertainty. Demand for safe assets such as gold often increases during periods of geopolitical instability.
A weaker US dollar also helped support the precious metal, making it more affordable for buyers using other currencies. Analysts say this factor prevented a sharper fall in prices.
Other precious metals showed mixed movements during the session. Silver traded close to 30 dollars per ounce, while platinum and palladium recorded small changes.
Financial experts say the gold market is likely to remain volatile in the coming days as investors monitor developments in the Middle East, movements in oil prices and signals from the US Federal Reserve about future interest rate policy.