Gold Heads for Weekly Decline Amid Oil-Driven Inflation Worries

Gold Prices Steady Amid Thin Trading, Pressured by Higher Oil Prices

Gold prices remained largely steady in thin trading on Friday, despite being poised for a weekly decline. The precious metal's price was pressured by higher oil prices, which have stoked inflation concerns and reinforced expectations of higher-for-longer interest rates.

As of 0436 GMT, spot gold eased 0.1 percent to $4,614.98 per ounce, and was on track for a weekly loss of about 2 percent. This decline follows a drop to a one-month low on Wednesday. U.S. gold futures for June delivery fell 0.1 percent to $4,626.40.

Trading volumes were light due to public holidays in top gold consumers China and India, which kept financial markets in these countries closed.

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The market's thin trading conditions were highlighted by Kyle Rodda, a senior financial market analyst at Capital.com. Rodda noted that the Asian session would be particularly thin due to public holidays, leaving the market waiting for a catalyst to make a directional move.

Geopolitical tensions continued to play a significant role in gold prices, with Iran's warning of "long and painful strikes" on U.S. positions in response to potential renewed attacks. This threat, combined with ongoing efforts to resolve the Iran conflict, helped keep Brent crude prices above $110 a barrel.

The Iran conflict has also had an impact on U.S. inflation, which accelerated in March due to higher gasoline prices. This has reinforced expectations that the Federal Reserve could keep interest rates on hold well into next year.

Global brokerages have gradually reduced their expectations of two U.S. rate cuts in 2026, with forecasts now split between modest easing and no cuts. This shift is due to persistent inflation risks and cautious policymakers. The European Central Bank and the Bank of England kept interest rates unchanged on Thursday, following similar decisions by the Fed and the Bank of Japan earlier in the week.

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While gold is traditionally seen as a hedge against inflation, elevated interest rates aimed at curbing price pressures tend to weigh on demand for the non-yielding metal.

In other metals, spot silver rose 0.4 percent to $73.99 per ounce, platinum eased 0.2 percent to $1,981.25, and palladium added 0.1 percent to $1,525.36.

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