Gold prices (XAU/USD) declined to around $4,690 during the early Asian session on Friday, driven by a stronger US Dollar and heightened geopolitical tensions in the Middle East [1]. The precious metal faced selling pressure as elevated oil prices fueled inflation concerns, making gold less attractive compared to interest-bearing assets [1].
The US military reportedly intercepted two Iranian oil supertankers attempting to evade its blockade, escalating tensions as Iran threatened vessels in the Strait of Hormuz. US President Donald Trump warned that if Iran did not move the oil, its infrastructure would be targeted, while Iranian officials accused Washington of violating a truce by maintaining the blockade [1].
Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold continues to take cues from the oil market, with rising energy costs keeping the risk of near-term dollar strength and elevated inflation in focus [1]. Surging oil prices this week have intensified worries over supply disruptions and inflation, which could delay interest rate cuts [1].
Despite these pressures, demand from major central banks, particularly in emerging markets such as China, Poland, India, and Turkey, may support gold prices. The People's Bank of China added 5 tonnes of gold in March, marking its 17th consecutive month of purchases [1].
CONCLUSION
Gold's drop below $4,700 reflects the combined impact of a stronger US Dollar, rising oil prices, and Middle East tensions. While these factors have pressured gold in the short term, ongoing central bank demand could provide support moving forward.