Gold Prices Rise Amid Decreasing Dollar and Oil Costs, Poised for Second Consecutive Monthly Decline

Gold Prices Rise Amid Weaker Dollar and Easing Oil Prices, But Remain on Track for Second Straight Monthly Decline

Gold prices surged on Thursday, fueled by a softer U.S. dollar and easing oil prices. However, the metal remains on track for a second consecutive monthly decline due to concerns over inflation amidst the ongoing Iran war. The ongoing conflict has cast a shadow over the outlook for interest rate cuts.

Spot gold prices rose 1.7% to $4,618.67 per ounce by 01:46 p.m. EDT (1746 GMT), after plummeting to a one-month low on Wednesday. U.S. gold futures settled 1.5% higher at $4,629.60.

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The dollar fell, with Japan intervening to prop up the yen for the first time in nearly two years. A weaker dollar makes gold more affordable for holders of other currencies. The Federal Reserve's rate expectations have taken center stage, with investors closely monitoring the central bank's decisions.

Global oil prices eased after reaching a four-year high earlier in the session. Soaring energy prices have stoked inflation concerns, which in turn has clouded the rate-cut paths of central banks. Spot gold has declined by more than 1% so far this month, despite being a hedge against inflation and uncertainty.

The Fed kept interest rates on hold on Wednesday, but raised concerns about inflation. Meanwhile, the Bank of England also kept rates on hold and outlined scenarios for the economic impact of the Iran war, one of which could require a "forceful" increase in borrowing costs.

Data revealed that the U.S. Personal Consumption Expenditures Price Index jumped 0.7% last month, the largest gain since June 2022. The increase was in line with economists' expectations.

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Analysts at Citi have stated that pressure to sell gold could remain strong in the near term due to the uncertainty in the Middle East. However, they expect the metal to regain its appeal as a safe-haven asset. Citi has kept its price targets for gold unchanged at $4,300 for the next three months and $5,000 for the 6-to-12-month window.

Meanwhile, the share of gold in India's foreign exchange reserves had risen to 16.7% by the end of March. Other precious metals also experienced gains, with spot silver surging nearly 3% to $73.59. Platinum rose 5.3% to $1,980.13, and palladium added 4.9% to $1,529.45.