(March 9): Gold fell, pressured by a stronger US dollar and inflationary risks, as the war in the Middle East extended into a second week and oil surged above US$100 a barrel.
Bullion dropped to near US$5,120 an ounce in early trading after posting its first weekly decline in more than a month. Major oil producers curbed output due to the US-Israeli war with Iran, which shows no sign of resolution, and a gauge of the dollar jumped 0.4%.
Gold has come under pressure as spiking crude prices stoke inflation fears in the US, raising the likelihood that the US Federal Reserve will leave interest rates unchanged for longer or even raise them. Higher borrowing costs, as well as a stronger dollar, are typically negative for precious metals. Bullion has also served as a source of liquidity during a deepening rout in global equities.
While trading has been choppy and upward momentum has stalled, gold has still gained nearly a fifth so far this year. US President Donald Trump’s upheaval of global trade and geopolitics, as well as threats to the Fed’s independence, has supported safer assets.
The war in the Middle East has entered its 10th day. Over the weekend, Tehran picked a new supreme leader and kept up attacks in the Persian Gulf region while Israel struck fuel depots in the Iranian capital and threatened the Islamic Republic’s power grid. Attacks on energy infrastructure and a halt to shipping through the Strait of Hormuz, which normally handles a fifth of the world’s oil, have driven up prices of crude and natural gas.
See also: Gold stuck in Dubai being sold at discount as war widens
Spot gold fell 0.9% to US$5,124.48 an ounce as of 6.56am in Singapore. Silver dropped 1.6% to US$83.22. Platinum fell more than 3% and palladium lost 0.9%. The Bloomberg Dollar Spot Index rose 0.4% after adding 1.3% last week.
Uploaded by Arion Yeow
