Khaberni - Gold rose on Thursday due to the dollar's decline and the drop in oil prices, but it is on its way to register a decline for the second consecutive month, as inflation concerns due to the ongoing war in Iran have cast their shadows on the expectations of cutting US interest rates.
Gold in spot transactions increased by 1.6% to $4615.50 an ounce by 15:40 GMT after it had dropped to a monthly low on Wednesday.
The US futures contracts for gold delivery in June rose by 1.5% to $4628.
David Meager, head of metal trading at High Ridge Futures, said that the gold market benefited from a slight slowdown in the acceleration of energy prices and the decline of the dollar on Thursday, with a significant focus on the interest rate forecasts from the Federal Reserve (the American central bank).
The dollar decreased following Japan's intervention to support the yen, in its first official intervention in about two years.
The weakening dollar helps make metals priced in it less expensive for holders of other currencies.
Global oil prices declined after recording their highest levels in four years earlier in the session.
The rise in energy prices has exacerbated inflation fears, negatively affecting the path of reducing interest rates at central banks.
Gold in spot transactions has lost more than 1% so far this month.
Gold is seen as a means to hedge against inflation and uncertainty, but rising interest rates diminish the attractiveness of the yellow metal which does not yield a return.
The Federal Reserve kept interest rates unchanged on Wednesday but expressed concerns about inflation.
Meanwhile, the Bank of England kept interest rates unchanged and set scenarios for the economic fallout from the war on Iran, one of which may require a "strong" increase in borrowing costs.
Data showed that the personal consumption expenditures price index in the United States jumped 0.7% last month, recording the largest increase since June 2022. This increase aligns with economists' expectations.
Analysts at Citi said that selling pressures on gold may remain strong in the very near term due to the fog of uncertainty in the Middle East, but they expect the metal to eventually regain its appeal as a safe haven asset.
Citi kept its gold price forecasts unchanged at $4300 for the next three months and five thousand dollars for the period from six to twelve months.
In the meantime, India’s share of gold in foreign exchange reserves rose to 16.7% by the end of March.
For other precious metals, silver rose by 2.4% in spot transactions to $73.19 an ounce, platinum jumped by 4.4% to $1961.50, and palladium gained 2.1% to $1488.92.
