By: Economy Middle east

Gold prices slipped on Thursday as a stronger U.S. dollar weighed on the metal, while rising oil prices revived inflation concerns and reduced expectations for near-term interest rate cuts.

As of 5:05 GMT, spot gold declined 0.52 percent to $5,145.16 per ounce, while U.S. gold futures for April delivery fell 0.54 percent to $5,151.1.

In the UAE, gold rates eased, with 24-carat gold falling AED4 to AED619.75 and 22-carat gold declining AED3.5 to AED574. Additionally, 21-carat gold fell AED3.5 to AED550.25 and 18-carat gold edged down AED3 to AED471.75.

Meanwhile, 14-carat gold lost AED2.25 to AED368.

Dollar and oil gains pressure bullion

The weakness in gold prices came as ongoing hostilities between the U.S., Israel and Iran kept markets focused on the dollar and oil prices. Crude surged in early Thursday trading after media reports said two international oil tankers were struck near Iraq.

The U.S. dollar strengthened by 0.3 percent, making dollar-denominated bullion more expensive for holders of other currencies.

“On a fundamental level, elevated geopolitical risk continues to support the dollar. Despite the CPI release, markets are clearly prioritizing geopolitical developments, which remain the key driver for the dollar,” said Vijay Valecha, Chief Investment Officer, Century Financial.

On Wednesday, Iran warned that oil could surge to $200 per barrel after its forces targeted merchant ships, while the International Energy Agency called for a large release of strategic reserves to mitigate what could become one of the most severe oil shocks since the 1970s.

Oil prices climbed in early trading, adding to inflationary pressures as supplies from the Gulf remain tight amid the U.S.-Israeli conflict with Iran. In turn, this stoked fears that central banks could adopt a more hawkish stance in the months ahead, an outlook that is typically negative for gold.

Inflation data in focus

Gold prices briefly climbed above $5,200 per ounce on Wednesday, but slipped back below that level following the release of U.S. consumer price index data. Although the figures came in line with expectations, they heightened concerns that rising energy costs could drive stronger inflationary pressures in the future.

The U.S. Consumer Price Index (CPI) rose 0.3 percent in February, in line with forecasts and up from January’s 0.2 percent increase. On an annual basis, CPI climbed 2.4 percent in the year to February, also meeting expectations.

Investors are now looking ahead to the release of the delayed January Personal Consumption Expenditures (PCE) index on Friday.

“Investors will increasingly shift focus to how the economy absorbs these shocks. Higher oil prices could push inflation higher and erode real incomes, particularly if the labor market weakens. This makes incoming economic data especially important,” added Valecha.

Other precious metals

Mixed signals over the Iran conflict also drove volatile moves in metal markets this week. U.S. President Donald Trump and other officials repeatedly said the war with Iran was nearing an end, even as hostilities continued.

As gold prices declined, spot silver fell 1.20 percent to $84.75. Platinum eased 0.59 percent to $2,156.24, while palladium dipped 0.38 percent to $1,630.75. Copper also lost 0.88 percent to $5.79.