Gold Falls as Brent Surges Past $100 Barrel Amid Inflation Concerns
Gold prices fell further on Friday after a 2% drop in the previous session, weighed down by concerns over inflation and interest rates. The precious metal eased 0.5% to $4,027.54 per ounce by 0523 GMT, with prices down more than $130 from its two-week high hit on Wednesday.
US gold futures for August delivery also declined 0.5% to $4,029.60. Despite this decline, gold is still on track for a small weekly gain of 0.3%. Brian Lan, Managing Director of GoldSilver Central, noted that 'in the short term, we expect more volatility' and observed that gold has been trading between $3,980 and $4,170 for weeks.
The price drop comes as Brent crude oil surged 7% on Thursday, breaking through $100 a barrel for the first time since May. Elevated crude prices have market participants concerned about inflation and potential interest rate hikes. While gold is often seen as a hedge against inflation, its appeal diminishes in high-interest-rate environments.
Investors are focused on next week's US Federal Reserve meeting, where policymakers are expected to keep rates unchanged. However, the market is pricing in an 81% chance of a hike in September, according to the CME FedWatch Tool. The European Central Bank maintained interest rates as expected but left room for another increase in September.