Gold prices were down on Friday lunchtime and set for a second consecutive weekly decline as surging energy costs from the Middle East conflict dimmed expectations of near-term US interest rate cuts.
Gold futures (GC=F) lost 0.2% to $5,117.30 a troy ounce, while spot prices retreated 1.1% to $5.113.39 at the time of writing.
Tim Waterer, chief market analyst at KCM Trade, said: “Given the ongoing uncertainty about the duration and scope of the conflict in the Middle East, I expect gold to remain on the radar for investors as a safety play.”
Markets are concerned that the Iran conflict will keep oil prices elevated for a prolonged period, pushing up inflation globally and prompting a more hawkish stance from major central banks.
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As oil prices surged, US president Donald Trump again called on Fed chair Jerome Powell to cut interest rates. Traders, however, expect the Fed to maintain rates in the current 3.5-3.75% range at the end of its two-day meeting on 18 March, according to CME Group’s FedWatch tool.
Bullion has fallen more than 1% this week and has dropped over 3% since the war began on 28 February.
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