Gold prices edged higher on Tuesday, supported by a weaker dollar, but remained on track to post their worst monthly performance in more than 17 years, as rising energy prices dampened expectations for U.S. interest rate cuts this year.
Spot gold rose 0.8% to $4,544.19 per ounce as of 01:14 GMT, while U.S. gold futures for April delivery gained 0.3% to $4,573.20.
The dollar declined, making dollar-denominated commodities less expensive for holders of other currencies.
Gold has lost around 14% since the start of the current month, heading for its largest drop since October 2008, pressured by a stronger dollar. Nevertheless, prices are still up about 5% so far this quarter.
Traders have almost completely ruled out the possibility of a rate cut by the Federal Reserve this year, as rising energy prices threaten to fuel broader inflation.
Before the outbreak of war in the Middle East, there had been expectations of two U.S. rate cuts this year.
Benchmark oil prices continued their gains, marking their largest monthly increase on record amid escalating conflict in the Middle East, raising concerns over supply.
Federal Reserve Chair Jerome Powell said on Monday that the central bank can afford to wait and assess how the war with Iran will impact the economy and inflation, noting that policymakers typically look past shocks such as those caused by rising oil prices.
U.S. President Donald Trump warned that the United States would destroy Iranian power plants and oil wells if Tehran does not open the Strait of Hormuz, after Iran dismissed U.S. peace proposals as “unrealistic” and launched waves of missiles toward Israel.
As for other precious metals, spot silver rose 1.2% to $70.81 per ounce, platinum increased 0.1% to $1,901.95, and palladium gained 1.1% to $1,421.45.
Reuters
