By: Economy Middle east

Gold prices edged lower on Thursday, as elevated oil prices stoked concerns about inflation and the prospect of prolonged high interest rates, while investors awaited clearer signals on stalled U.S.-Iran peace talks.

As of 4:45 GMT, spot gold fell 0.67 percent to $4,703.3 per ounce, while U.S. gold futures for June delivery declined 0.79 percent to $4,715.45.

In the UAE, gold rates also posted declined, with 24-carat gold falling AED2.5 to AED566.75 and 22-carat gold declining AED2.25 to AED524.75.

Additionally, 21-carat gold and 18-carat gold edged down AED2 to AED503.25 and AED431.25, respectively.

Meanwhile, 14-carat gold dipped AED1.25 to AED336.5.

Hormuz blockade raises inflation fears

Gold prices remained under pressure as uncertainty persisted over the prospects for renewed U.S.-Iran negotiations, even after President Donald Trump extended the ceasefire indefinitely.

Both Tehran and Washington showed little willingness to resume talks after negotiations scheduled for this week failed to materialize. Iran insisted that the U.S. must first lift its blockade before any discussions can move forward, while Washington demanded that Iran fully reopen the Strait of Hormuz.

With Iran continuing to restrict access through Hormuz and the U.S. maintaining its naval blockade while monitoring Iranian vessels across wider Asian waters, tensions remained unresolved and both sides appeared locked in a standoff.

Meanwhile, oil prices climbed back above $100 per barrel this week, reinforcing concerns that higher energy costs could drive inflationary pressures further.

Rising crude oil prices can fuel inflation by driving up transportation and production costs, which in turn increases the likelihood of higher interest rates. Although gold is traditionally viewed as a hedge against inflation, elevated interest rates tend to boost the appeal of yield-bearing assets, reducing demand for bullion.

U.S. dollar hovers near one-and-a-half-week high

Gold prices also came under pressure from a stronger dollar, which hovered near a one-and-a-half-week high on Thursday. The greenback gained after Donald Trump’s nominee for Federal Reserve Chair, Kevin Warsh, indicated he had made no commitments to lower interest rates, despite the president’s calls for cuts.

The Federal Reserve is now expected to hold off on easing policy for at least six months, as war-driven energy shocks risk reigniting already elevated inflation.

Market expectations have shifted accordingly, with traders now pricing in a 23 percent chance of a 25-basis-point rate cut in December, down from 28 percent a week earlier. Prior to the conflict, markets had anticipated two rate cuts this year.

Other precious metals

As gold prices fell, the precious metals market declined. Spot silver dropped 2.08 percent to $76.08 per ounce, platinum declined 1.77 percent to $2,037.77 and palladium fell 1.29 percent to $1,525.12.