Gold on track for weekly loss on higher dollar, oil prices

Gold prices declined in the European market on Friday, deepening losses for the second consecutive day and hitting their lowest level in nearly two weeks. The metal is on track for a weekly loss, pressured by a rising U.S. dollar and high oil prices as tensions escalate between the United States and Iran in the Strait of Hormuz, despite the extension of the ceasefire agreement.

Although gasoline prices in the U.S. are climbing and inflationary pressures are mounting on Federal Reserve policymakers, the probability of a U.S. interest rate hike this April remains very low.

Price Overview

- Gold Prices Today: Gold prices fell by 0.75% to ($4,659.09), the lowest since April 13, from an opening level of ($4,693.02), while recording a high of ($4,711.21).

- At the close of trading on Thursday, gold prices lost 1.0%, marking their third loss in the last four days due to the escalating political conflict between the U.S. and Iran.

Weekly Trading

Throughout this week's trading, which officially concludes with price settlements today, gold prices have fallen by approximately 3.75% so far. This puts the metal on the verge of incurring its first weekly loss in five weeks.

The U.S. Dollar

The dollar index rose by more than 0.1% on Friday, extending gains for the fourth consecutive session. A stronger American currency typically makes dollar-denominated gold less attractive to buyers holding other currencies.

This ascent comes as investors focus on the U.S. dollar as a safe haven, with the U.S. and Iran remaining at odds over the ceasefire, the blockade, nuclear issues, and control of the Strait. These disputes keep the strategic waterway effectively closed, threatening an energy sector shock that could damage global economies.

Analysis and Insights

Skye Masters, head of markets research at National Australia Bank, stated: "Despite Trump's extension of the ceasefire, tensions remain high with Iran's refusal to reopen the Strait of Hormuz and the continued U.S. naval blockade, increasing the risk of prolonged supply disruptions."

Masters added that extreme economic and trade risks are undervalued, and inflationary pressures are expected to persist until the end of the year.

Iranian War Updates

- Trump: Tehran wants to make a deal, but its leadership is in turmoil.

- Trump: We are in no rush for a deal, but if Iran does not want one, "I will end it militarily."

- Iranian President Masoud Pezeshkian described the U.S. blockade and threats as "main obstacles" to genuine negotiations.

- Pakistan continues its efforts to revive "peace talks" between the U.S. and Iran in Islamabad.

- Iran seized a new vessel in the Strait of Hormuz, challenging U.S. naval superiority.

Global Oil Prices

Global oil prices rose by an average of 0.75% on Friday, maintaining gains for the fifth consecutive day and trading near two-week highs. This follows mounting fears of energy supply disruptions from the Arabian Gulf as the Strait of Hormuz remains closed to oil tankers. The rise in global oil prices renews concerns over accelerating inflation, which could push central banks to raise interest rates in the near term.

U.S. Interest Rates

- Kevin Warsh, the nominee for a senior Federal Reserve role, stated on Tuesday that he has made no promises to Trump regarding interest rate cuts.

- According to the CME Group's FedWatch tool: the probability of keeping U.S. interest rates unchanged at the April meeting is currently stable at 99%, while the probability of a 25-basis-point hike stands at 1%.

Expectations for Gold Performance

Kelvin Wong, market analyst for Asia Pacific at OANDA, said: "As long as the risk of a prolonged closure of the Strait of Hormuz remains, oil will continue to trade at high levels, putting pressure on gold prices."

Wong added: "Gold remains trapped in a sideways range between the 50-day moving average at approximately $4,900 and a low at the 20-day moving average of $4,645. Breaking out of this range depends on developments in the Middle East."

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, decreased by approximately 1.72 metric tons on Thursday. This marks the second consecutive daily decline, bringing the total to 1,049.19 metric tons—the lowest level since April 13.