Gold prices dropped more than 2% on Thursday, falling from a two-week high reached the previous day, amid rising tensions in the Middle East that pushed energy prices higher and stoked inflation concerns. Spot gold declined 2.1% to $4,043.14 per ounce by early afternoon trading, while U.S. gold futures for August delivery settled 2.5% lower at $4,050.20, according to livemint.com.
The fall in gold prices followed a surge in crude oil prices driven by the Middle East conflict, which increased inflation expectations and strengthened bets on interest rate hikes by central banks. The U.S. dollar rose 0.3%, making gold more expensive for overseas buyers, while yields on the 10-year U.S. Treasury note climbed to their highest level in over a year, further pressuring gold prices, livemint.com reported.
Gold is often seen as a hedge against inflation and geopolitical risk, but the combination of rising bond yields and a stronger dollar tends to weigh on bullion prices. The recent volatility highlights the sensitivity of gold to macroeconomic factors such as energy prices, currency strength, and monetary policy expectations. This decline contrasts with the previous session’s rally, which had pushed gold to its highest level since July 7.
The next key data point for gold investors will be the upcoming U.S. inflation report, which could influence Federal Reserve decisions on interest rates. Market participants will closely watch crude oil price movements and geopolitical developments in the Middle East for further signals on inflation and monetary policy, as noted by livemint.com.