ISLAMABAD (Kashmir English): Gold prices came under pressure as disruptions to oil shipments from the Middle East raised concerns about higher energy costs and persistent global inflation.
According to Bloomberg, gold was trading near $4,300 per ounce after declining more than 1% in the previous session, reaching its lowest level in nearly five weeks.
The disruption to Middle Eastern oil supplies has heightened fears that energy prices could rise further, adding to inflationary pressures around the world. Investors are increasingly concerned that higher oil prices could make it more difficult for central banks to bring inflation under control.
Market expectations are now pointing to a roughly 92% probability of a US Federal Reserve interest-rate hike at this week’s meeting.
Higher interest rates generally weigh on gold because the precious metal does not generate regular interest or dividend income. When interest rates rise, investors often shift toward interest-bearing assets that can provide returns.
As a result, concerns over Middle East oil supplies are having a mixed impact on financial markets. While supply disruptions threaten to increase energy costs and inflation, they are simultaneously strengthening expectations of tighter US monetary policy, putting additional downward pressure on gold prices.
