By: Creamer media

Gold prices were headed for a second consecutive weekly decline on Friday, as rising energy costs reduced expectations that the U.S. Federal Reserve will cut interest rates in the near term.

As of 7:05 GMT, spot gold was down 0.23 percent to $5,106.26 per ounce, while U.S. gold futures for April delivery slipped 0.38 percent to $5,106.30. Despite Friday’s brief advance in early trading, gold has fallen by more than 1 percent so far this week.

In the UAE, gold rates eased further, with 24-carat gold falling AED2.5 to AED615 and 22-carat gold declining AED2.25 to AED569.5. Additionally, 21-carat gold fell AED2.25 to AED546 and 18-carat gold edged down AED2 to AED468.

Meanwhile, 14-carat gold lost AED1.5 to AED365.

Oil price surge raises inflation fears

Yields on the U.S. 10-year Treasury note edged lower, making non-yielding assets such as gold more attractive to investors. However, concerns over rising inflation and uncertainty about the Federal Reserve’s ability to lower interest rates amid persistently high oil prices are partly offsetting gold’s traditional safe-haven appeal.

Adding to market tensions, Iran’s Supreme Leader Mojtaba Khamenei said on Thursday that Tehran intends to keep the strategic Strait of Hormuz closed as leverage against the United States and Israel. The remarks heightened fears over global energy supplies and broader market risk sentiment.

Oil prices climbed above $100 per barrel after attacks on oil tankers and warnings from Iran reduced hopes for a rapid de-escalation of the Middle East conflict.

Federal Reserve to keep rates unchanged

Amid the surge in oil prices, U.S. President Donald Trump once again urged Federal Reserve Chair Jerome Powell to cut interest rates. However, traders widely expect the Federal Reserve to keep rates unchanged in the 3.5-3.75 percent range at the conclusion of its two-day policy meeting on March 18, according to CME Group’s FedWatch tool.

Since the outbreak of the Iran conflict in late February, gold prices have largely remained under pressure, while the dollar has gained traction as the preferred safe-haven asset. Bullion has continued to trade within a $5,000-$5,200 per ounce range.

Central banks, including the Federal Reserve, may be forced to reassess the possibility of near-term interest rate cuts if inflation begins to accelerate. Higher borrowing costs could draw more foreign investment into the United States, strengthening the dollar’s appeal.

A firmer greenback typically weighs on gold by making the metal more expensive for holders of other currencies and reducing its traditional safe-haven attractiveness. The U.S. dollar index was last up about 0.07 percent.

Other precious metals

As gold prices declined, the precious metals market witnessed mixed movement. Spot silver fell 0.74 percent to $84.28, while platinum gained 0.46 percent to $2,141.84 and palladium rose 0.74 percent to $1,629.78.