Gold Gains But Set For Second Monthly Fall On Inflation Fears
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Gold rose 1% on Thursday due to dip-buying but faced its second monthly decline as elevated oil prices fueled inflation and higher-for-longer interest rate concerns. Brent crude surpassed $124 a barrel on potential U.S. military action against Iran, raising supply disruption fears. The Federal Reserve maintained interest rates steady, citing inflation worries, with three dissents favoring lower borrowing cost signals. While gold historically hedges inflation, high rates diminish its appeal. Silver, platinum, and palladium also saw gains but were on track for monthly falls.
- Fed leaves rate steady on inflation concerns
- Trump holds talks on prolonged Iran blockade
- Traders pricing in no Fed rate cuts this year
- Brent crude oil rises above $124 a barrel
April 30 (Reuters) - Gold rose on Thursday on dip-buying, but was on track for a second straight monthly fall as elevated oil prices kept fears of inflation and higher-for-longer interest rates alive.
Spot gold XAU= was up 1% at $4,588.09 per ounce, as of 0736 GMT, after falling to its lowest point since March 31 in the last session. Bullion was down about 1.7% so far this month.
U.S. gold futures GCcv1 for June delivery rose 0.4% to $4,578.10.
"Gold has struggled again this month as oil strength has dominated the narrative. Rising crude pushes up inflation expectations and interest rate forecasts, which in turn caps gold's appeal," said Tim Waterer, chief market analyst at KCM Trade.
However, "a combination of bargain-hunting and expectations that a peaceful resolution to the (U.S.-Iran) conflict will be found at some point are providing something of a floor for gold," he said.
Brent crude rose above $124 a barrel on a report that the U.S. was considering potential military action against Iran to break the deadlock in negotiations to end the war, increasing concerns about more supply disruptions to already curtailed Middle East exports. O/R
The Federal Reserve held interest rates steady on Wednesday, but in its most divided decision since 1992 noted rising concerns about inflation in a policy statement that drew three dissents from officials who no longer feel the U.S. central bank should communicate a bias towards lowering borrowing costs.
While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset.
Spot silver XAG= rose 1.8% to $72.78 per ounce, platinum XPT= gained 2.9% to $1,934.54, and palladium XPD= was up 1.9% at $1,486.82. All three metals were on track for a second straight monthly fall.
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