Gold tumbles through early Friday trading on increasing inflation fears driving expectations that interest rates will remain high for some time amid rising oil prices. The yellow metal is also getting dinged by a stronger dollar.
Two U.S. inflation reports this week showed that the costs of goods are climbing sharply and as the war in the Middle East dragged on. The dollar rallied to the best week since March, making gold less attractive to holders of other currencies. Treasury yields also rose.
June gold futures fell 0.5% Thursday to $4,685.30 an ounce on Comex, and the most-active contract declined 1% in the first four days of the week. Bullion dropped 1% last month after sliding 11% in March and climbing 11% in February. It rallied 64% last year. The June contract is currently down $127.20 (-2.71%) an ounce to $4558.10 and the DG spot price is $4540.50.
Economic news this week showed the consumer price index climbed sharply last month, with the headline figure for April increasing 3.8% compared with a year earlier, the biggest annual jump in three years amid the war in Iran. The producer price index, which came out Wednesday, showed the biggest increase since 2022 on energy cost.
The Iran conflict has resulted in the closure of shipping traffic through the Strait of Hormuz, a critical oil artery, sending oil prices soaring and raising fears of persistent inflation. This has created speculation that the Fed may have to increase interest rates where it had been forecast to cut them.
The Fed last month held interest rates steady at 3.5% to 3.75%, as expected, but policymakers were unusually divided. Almost all the investors tracked by the CME FedWatch Tool are betting on rates staying unchanged again in June. The Iran war has erased expectations that the Fed would cut interest rates this year. Most investors tracked by the tool now expect the central bank to keep U.S. interest rates unchanged this year. Higher interest rates are typically bearish for gold, making it more expensive for holders of other currencies.
The Fed has kept interest rates unchanged this year after three previous rate cuts. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts in 2024.
Front-month silver futures lost 4.5% Thursday to settle at $85.33 an ounce on Comex, though the July contract increased 5.5% so far this week. The most-active contract touched a record above $115 in January. Silver lost 1.2% in April after dropping 20% in March and gaining 19% in February. It rose 141% last year. The July contract is currently down $7.703 (-9.03%) an ounce to $77.625 and the DG spot price is $76.90.
Spot palladium fell 4.9% Thursday to $1,449.50 an ounce and is down 2.9% this week. Palladium rose 3.2% last month after tumbling 17% in March and gaining 8.8% in February. Palladium rose 74% last year. Currently, the DG spot price is down $31.80 to $1424.00.
Spot platinum decreased 4.8% Thursday to $2,074.80 an ounce but added 0.8% so far this week. It gained 1.3% in April after declining 17% in March and advancing 15% in February. Platinum increased 122% in 2025. The DG spot price is currently down $102.20 to $1988.20.
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