Gold Erases Annual Gains as Middle East Conflict Sparks Inflation Concerns Gold prices fell sharply on Friday, erasing all of the metal’s gains for the year as tensions in the Middle East intensified fears of rising inflation. The decline marked the ninth consecutive day of losses for the precious metal, with bullion dropping nearly 5% to below $4,300 per ounce during Asian trading sessions. The drop followed a surge in energy prices driven by the ongoing conflict, which has complicated efforts by central banks to cut interest rates in the near term. The war has heightened concerns about global inflation, as rising energy costs and disrupted supply chains weigh on economies worldwide. Analysts noted that the conflict has reduced the likelihood of immediate rate cuts by the U.S. Federal Reserve and other central banks, which has been a key factor supporting gold’s value in recent months. Gold, which does not generate income through interest or dividends, has struggled as higher rates make holding the metal less attractive compared to other assets. The decline in gold prices has been particularly steep since the conflict began, with the metal posting its largest weekly drop since 1983. Investors have increasingly turned to traditional assets like Treasury bonds and corporate stocks, which offer higher yields in a rising rate environment. Meanwhile, the war has also fueled speculation about potential geopolitical risks, further dampening demand for gold as a safe-haven asset. Market participants are closely watching developments in the Middle East, as prolonged instability could lead to sustained inflationary pressures. The U.S. Federal Reserve has signaled that it remains committed to its tightening cycle, with officials emphasizing the need to keep rates elevated until inflation returns to target levels.#gold #energy_prices #central_banks #middle_east_conflict #u_s_federal_reserve
Global Commodity Markets React to Geopolitical Tensions and Economic Data Zinc prices traded within a range of 322.4 to 328.4 during the day, according to Kedia Advisory. Meanwhile, gold prices declined in the previous session, ending at 161,789, a 0.93% drop. The U.S. Dollar Index strengthened, hovering near its highest levels since tensions between the United States and Iran escalated earlier this month. The dollar's rise reduced the appeal of gold, as investors remained cautious ahead of the upcoming U.S. Federal Reserve policy meeting. Inflation in the U.S. remained stable, with consumer prices rising 2.4% year-on-year in February. Core inflation, which excludes food and energy, stood at 2.5%, the lowest level since March 2021. Despite moderating inflation, markets expect the Fed to keep interest rates unchanged, with traders anticipating only one potential 25 basis point rate cut, possibly in September. China continued to support the global gold market, with the People's Bank of China extending its gold-buying streak for a 16th consecutive month. Total holdings reached 74.22 million troy ounces by the end of February. China’s net gold imports through Hong Kong surged by 68.7% month-on-month in January, reflecting strong investment demand. Technically, the market saw long liquidation, with open interest declining 0.71% to 7,552 while prices dropped by Rs1,514. Gold’s immediate support is at 160,960, with a break below potentially testing 160,135. Resistance is seen at 162,880, and a move above could push prices toward 163,975. Silver prices fell sharply, ending at 268,491, a 3.37% decline. The U.S. Dollar Index regained strength as investors assessed ongoing geopolitical tensions and fresh U.S. inflation data.#pentagon #strait_of_hormuz #hsbc #u_s_federal_reserve #people_s_bank_of_china
