Khaberni - Gold prices fell slightly today, affected by a decline in hopes for a near-term U.S. interest rate cut due to rising energy prices, while the weakening dollar limited the losses.
The spot gold price fell 0.2 percent to $5007.58 per ounce by 0240 GMT. U.S. gold futures for April delivery fell one percent to $5011.10.
The dollar fell slightly, making dollar-denominated commodities like gold less expensive for holders of other currencies.
Yields on U.S. 10-year Treasury bonds declined, enhancing the attractiveness of gold, which does not yield interest.
Strategist at OCBC, Christopher Wong said: “If rising energy prices lead to increased inflation and the Federal Reserve remains cautious about cutting interest rates, it could keep real yields high, which typically poses a barrier to gold.”
Oil prices remained above $100 per barrel as the U.S.-Israeli war on Iran entered its third week, jeopardizing oil infrastructure and keeping the Strait of Hormuz closed in the largest ever disruption to global supplies. High oil prices contribute to inflation by raising transportation and production costs. Gold is a hedge against inflation, but rising interest rates make yield-generating assets more attractive, reducing the appeal of the yellow metal.
It is widely expected that the Federal Reserve will hold interest rates steady for the second consecutive time when it releases its monetary policy statement on Wednesday.
As for other precious metals, spot silver fell 1.2 percent to $79.57 per ounce. Platinum rose 0.8 percent to $2042.98, and palladium climbed one percent to $1566.91.
