On Thursday, gold quotes reached their lowest level in the last two months. According to analysts, the reason for this decline was new military clashes between the US and Iran, which heightened concerns about inflation, contributed to the rise of the dollar, and increased oil prices.
This is reported by Finway
Gold under pressure from the dollar and geopolitics
The price of gold decreased by 1.6%, dropping to $4,385.32 per ounce, marking a low since March 26. Gold futures in the US for June delivery also fell by 1.4% to $4,383.30 per ounce. The strengthening of the dollar to its highest level in over a month made gold less accessible to investors holding other currencies.
Gold has been under pressure for several months due to the escalation of the US-Israeli conflict with Iran, which flared up in late February. The effective closure of the Strait of Hormuz caused a sharp rise in Brent oil prices, further exacerbating inflationary risks and strengthening expectations of a possible interest rate hike in the US.
“Gold has fallen to a two-month low and entered bear market territory as new military actions between the US and Iran dashed hopes for a deal between the two countries. Increased geopolitical uncertainty is directing risk-averse capital toward the dollar, just as higher oil prices amplify concerns about inflation,” wrote senior market analyst at Tradu.com Nikos Tsabouras.
Price dynamics of precious metals
Despite gold’s status as a traditional hedge against inflation, it performs worse during periods of high interest rates as investors prefer instruments with higher yields.
The spot price of silver fell by 2.2% to $73 per ounce, while platinum decreased by 1.9% to $1,881.15. Both metals reached nearly a monthly low. Palladium also lost value, down 3.2% to $1,346.75 per ounce.