High oil prices trigger sharp plunge in gold...seven straight sessions of losses

[Financial News] International gold prices slumped as the surge in oil prices driven by the Middle East war heightened fears of a resurgence in inflation. Gold, long regarded as a safe-haven asset, has been losing ground under mounting interest rate pressures, posting an unusual pattern of declines for seven consecutive trading sessions.
On the 19th (local time), April delivery gold futures on the New York Mercantile Exchange (NYMEX) closed at 4,605.7 dollars per ounce, down 5.9% from the previous session. Spot gold also fell 4.3% to 4,612.21 dollars per ounce as of 1:31 p.m. Eastern Time.
Silver prices plunged as well. April delivery silver futures dropped 8.2% to 70.97 dollars per ounce, marking an even steeper decline than gold.
Analysts say the drop reflects rising oil prices caused by the Middle East conflict feeding into inflationary pressure, which in turn has dampened expectations for interest rate cuts by major central banks. Because gold does not pay interest, its relative appeal diminishes when rates rise or when a high-rate environment looks set to persist.
In fact, the Federal Reserve System (Fed) left its benchmark rate unchanged the previous day, and the Bank of England (BoE) also kept rates on hold, citing inflation concerns. As a result, global bond yields came under upward pressure, creating a headwind for gold prices.
Market participants also point to position adjustments by investors. With gold prices having risen until recently, many saw the market as entering a perceived peak zone, prompting a wave of profit-taking.
Dan Coatsworth, head of markets at investment platform AJ Bell plc, explained, "It appears that investors are selling assets that have generated profits for them so far, or are repositioning in response to the stronger dollar."
Daniel Ghali, a commodities strategist at TD Securities, said, "Over the past year, gold has been a core asset in strategies to hedge against a weaker dollar, but that foundation is starting to crack," adding, "In the short term, downside risks to gold prices could persist."
In particular, the prospect of a stronger dollar is adding further pressure on gold. Because gold is priced in dollars, a rise in the dollar’s value tends to weigh on its price. The Middle East risk has simultaneously boosted demand for safe assets and pushed up interest rates and the dollar, creating opposing forces that have instead driven gold lower—a pattern some describe as an "atypical move."

km@fnnews.com Kim Kyung-min Reporter