In trading on Friday, gold prices witnessed a decline in the spot market, breaking the $4,500 per ounce barrier. This decline is due to a price correction as a result of the appreciation of the dollar and expectations of a tighter monetary policy.
Spot gold recorded a decrease of $3.20, equivalent to 0.07 percent, to reach $4,497.87 per ounce.
This development in the last session reinforces the trend towards the yellow metal recording a weekly loss, as it is exposed to pressure from the strength of the dollar index, which increases the cost of gold for holders of other currencies.
The closure of the Strait of Hormuz also contributes to the continued rise in crude oil prices, which increases inflationary pressures by increasing transportation and manufacturing costs. High inflation typically enhances gold’s appeal as a hedging tool, but rising interest rates reduce appetite for non-yielding assets.
Most major developed market central banks kept interest rates steady this week, but signaled they were ready for further monetary tightening if the inflation shock from energy prices persists. (Sky News Arabia)
