Global gold prices tumbled on Friday, losing nearly 2 percent, as a surging U.S. dollar and renewed fears of interest rate hikes weakened the metal’s safe-haven appeal.
Spot gold dropped 1.8 percent to $4,566.26 per ounce by late morning trading, reversing earlier gains, while U.S. gold futures for April delivery declined 0.8 percent to $4,570.20.
The decline follows reports that the United States is deploying thousands of additional troops to the Middle East, a move that has heightened geopolitical tensions and sparked fresh concerns over rising oil prices and inflation.
The development pushed the U.S. dollar and Treasury yields higher, making dollar-denominated commodities like gold more expensive for foreign investors and less attractive overall.
Analysts say the market reaction reflects growing anxiety that prolonged instability in the Middle East—particularly tensions involving Iran and the potential disruption of the Strait of Hormuz—could sustain high energy prices and reinforce inflationary pressures globally.
Despite gold’s traditional role as a hedge against inflation and uncertainty, rising interest rates continue to weigh heavily on the metal, as higher yields reduce the appeal of non-interest-bearing assets.
Market sentiment has also been shaped by expectations of tighter monetary policy across major economies. The European Central Bank and the Bank of England are increasingly expected to raise interest rates as early as April.
Meanwhile, the Federal Reserve has held rates steady for now but signalled concerns over rising inflation, with Chair Jerome Powell warning that the policy outlook remains highly uncertain due to ongoing geopolitical risks.
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The pressure extended across the precious metals market. Spot silver plunged 4.6 percent to $69.52, while platinum fell 1.3 percent to $1,945.55 and palladium declined 2.4 percent to $1,412.74—putting all three metals on track for weekly losses.
Market watchers say while prices may stabilise in the near term, volatility is likely to persist as investors navigate a complex mix of geopolitical tensions, inflation risks, and shifting monetary policy expectations.
Reuters
