FX.co ★ Gold Falls in Rising Inflation Risks

Gold dropped below $5,150 per ounce on Thursday, declining for a second consecutive session as soaring oil prices intensified inflation concerns and dampened expectations for interest rate cuts by major central banks. Oil rose for a second day amid fears of a prolonged war involving Iran, overshadowing a coordinated release of strategic reserves by leading economies. Markets largely dismissed the emergency action as inadequate, even after the International Energy Agency approved its largest-ever drawdown of 400 million barrels. Gold also faced headwinds from a stronger US dollar and sharply higher Treasury yields, as mounting forward-looking inflation worries further reduced the likelihood of Federal Reserve easing, with current projections pointing to just one rate cut later this year. At the same time, data released on Wednesday showed US core inflation remained subdued at the start of the year, while the European Union cautioned that its inflation rate could surpass 3% in 2024.