Gold prices dip as US fed policy, global inflation bite

Gold prices edged lower in global trading as investors reacted to persistent inflation concerns and uncertainty surrounding US monetary policy, dampening demand for the traditional safe-haven asset.

Spot gold declined by 0.3 per cent to around $4,599 per ounce, while US gold futures also slipped to approximately $4,611. Analysts say the dip reflects growing caution among investors, who are increasingly factoring in the likelihood of prolonged higher interest rates.

Market sentiment has also been influenced by geopolitical developments, particularly ongoing tensions involving the United States and Iran. Investors are closely watching any signs of progress in potential diplomatic efforts, as these could impact both energy markets and broader financial stability.

US President Donald Trump recently indicated that Washington may take action to clear shipping disruptions in the Strait of Hormuz, a key global oil transit route. At the same time, Iranian media reports suggest Tehran is reviewing a US response delivered through Pakistan, adding another layer of uncertainty to the situation.

Oil prices have remained elevated above $100 per barrel, intensifying fears that central banks may keep interest rates higher for longer to combat inflation. This environment tends to weigh on gold, which does not offer interest returns, making it less attractive compared to yield-generating investments.

The Federal Reserve reinforced this outlook by maintaining its current interest rate stance in its latest meeting. Officials signaled caution, warning that inflation risks could rise further amid geopolitical instability, including tensions linked to Iran.

Recent economic data supports these concerns. The US Personal Consumption Expenditures (PCE) Index, closely watched by policymakers, rose by 0.7 per cent in March, marking its sharpest increase since mid-2022 and underscoring persistent inflationary pressure.

Meanwhile, other precious metals showed mixed performance. Silver, platinum, and palladium recorded modest price fluctuations, reflecting broader market uncertainty.