Gold Set for Weekly Loss as Dollar Strength Offsets War Premium
(Bloomberg) -- Gold recouped some losses but remained on track for the first weekly decline in more than a month, pressured by a stronger US dollar and inflationary risks tied to the ongoing war in the Middle East.
Bullion rose as much as 1.2% before paring gains, but was still headed for a weekly loss of more than 3%. A gauge of the US currency has risen 1.5% this week, the most since October 2024, while US Treasuries fell for a fourth day on Thursday, lifting yields to the highest in several weeks.
That came as the US-Israeli war with Iran sent oil prices surging and prompted traders to trim bets on the Federal Reserve cutting interest rates. Swaps traders are pricing in about 35 basis points of rate cuts by year-end, compared with 60 basis points at the end of last week. A stronger dollar and higher borrowing costs are typically negative for gold.
While trading has been choppy and upward momentum has stalled in recent days, 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.
Global markets remained on edge as the war entered its seventh day. Trump insisted that he would be involved in selecting Iran’s next leader, while his administration is considering options to address the spike in oil and gasoline prices. Tehran has attacked energy infrastructure in several countries and the strategic Strait of Hormuz is effectively closed to shipping. Crude was headed for its biggest weekly surge since 2022.
A broad selloff in equities this week has meant that some investors are using gold as a source of liquidity, exposing the haven asset to the swings in global stock markets.
Spot gold rose 0.2% to $5,089 an ounce as of 10:26 a.m. in London. Silver climbed 1.1% to $83.08. Platinum and palladium also advanced.
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