Gold Slumps 2% in a Week as Soaring Oil Prices Heighten Inflation Concerns: What’s Next?

Gold prices remained relatively stable in the international market on Friday, trading around $4,620 per ounce. However, the yellow metal is on track for a nearly 2% weekly loss, driven by rising oil prices that briefly surged to $126 per barrel. This spike in oil prices has raised concerns about inflation, leading to expectations of prolonged higher interest rates. In the domestic market, the Multi Commodity Exchange (MCX) was closed for the morning session due to Maharashtra Day, but gold futures for June delivery closed 114 rupees higher at Rs 1,51,225 per 10 grams on Thursday, reflecting modest resilience against headwinds from the oil market.

The geopolitical landscape, particularly the ongoing conflict between Iran and the U.S., continues to exert influence over global market conditions. With oil prices remaining elevated above $110 per barrel, concerns are mounting about potential military escalations. Recent statements from U.S. President Donald Trump indicate that military actions to block Iranian ports could prolong the crisis, while Iranian officials have warned of significant retaliation. This uncertainty is keeping investors on alert, impacting various commodities, including gold, which often serves as a safe-haven asset during times of geopolitical tension.

Looking to the future, gold is expected to experience volatility and trade within a range, with support identified near Rs 1,48,000 and resistance around Rs 1,52,000, according to Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. Analysts suggest that the recent decline in gold prices correlates more with rising oil prices and inflation concerns rather than economic growth indicators. Deutsche Bank has even projected an increase in gold’s share among global central bank reserves, potentially leading to prices reaching $8,000 an ounce in the next five years, which would signify an 80% increase from current market levels.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)