Gold falls on firmer dollar, dimming US rate cut hopes

Gold prices fell on Thursday, weighed down by a firmer US dollar and waning hopes for near‑term US interest‑rate cuts as higher energy prices stoked inflation concerns.

Spot gold was down 0.4 per cent at $5,153.79 per ounce as of 05:45 GMT. US gold futures for April delivery fell 0.4pc to $5,159.20.

The US dollar firmed 0.2pc, making dollar-priced bullion more expensive for holders of other currencies.

“I think the USD strength and interrelated rates story is a slight headwind for gold despite the actual violence that’s taking place, which is otherwise supportive of gold,” said Nicholas Frappell, global head of institutional markets at ABC Refinery.

Iran said the world should brace for $200-a-barrel oil after its forces struck merchant ships on Wednesday, while the International Energy Agency (IEA) urged a massive release of strategic reserves to blunt one of the worst oil shocks since the 1970s.

Oil prices rose over $100 a barrel, adding to inflation pressures, as Iran stepped up attacks on oil and transport facilities across the Middle East.

Iran has deployed about a dozen mines in the strait, according to sources, a move that could complicate efforts to reopen the narrow waterway, a key route for global oil and liquefied natural gas shipments.

Tankers in the strait have been stranded for more than a week, and producers have suspended output as storage nears capacity.

Goldman Sachs has delayed its forecast for US Federal Reserve rate cuts, and now expects quarter-point reductions in September and December, citing rising inflation risks linked to the Middle East conflict.

In economic data, the US consumer price index (CPI) rose 0.3pc in February, matching forecasts and accelerating from January’s 0.2pc increase. CPI rose 2.4pc in the year to February, also in line with expectations.

Investors are now awaiting the release of January’s delayed Personal Consumption Expenditures index on Friday.

Spot silver fell 0.5pc to $85.33 per ounce. Spot platinum lost 0.3pc to $2,162.24, while palladium rose 0.3pc to $1,642.05.