Spot gold prices fell 0.60% to $4,666.43 per ounce on Friday. Gold prices are expected to decline 3.5% for the week, snapping a four-week rally.
Gold prices were pressured by a stronger dollar, which rose 0.7% this week, making dollar-denominated gold more expensive for holders of other currencies.
Experts expect gold prices to decline this week as a sharp rise in oil prices has heightened inflation concerns and the prospect of high interest rates for a long time, while peace talks between the US and Iran remain stalled.
Meanwhile, US gold futures for June delivery fell 0.92% to $4,680.66. As long as the threat of a further closure of the Strait of Hormuz remains, oil prices will remain high, putting pressure on gold prices. Rising oil prices could also contribute to inflation by increasing transportation and production costs, which in turn increases the likelihood that interest rates will remain high for a longer period.
While gold is traditionally seen as an inflation hedge, higher interest rates tend to increase the appeal of income-producing assets, reducing demand for the precious metal. Treasury yields and a stronger dollar are also putting pressure on gold.
As gold prices declined, the precious metals market also declined: spot silver fell 0.90% to $74.75 per ounce, platinum fell 1.03% to $1985.37, and palladium fell 0.40% to $1462.25.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
