Quick overview

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Gold prices increased slightly in Asian trade on Thursday but stayed well below key levels due to uncertainty over interest rates and the inflationary effects of the U.S.

The producer inflation data and the Federal Reserve’s prediction of higher US inflation put pressure on gold prices, pushing them well below the desired $5,000 per ounce level and to a low of more than a month.  Gold futures fell 1.3 percent to $4.8K/oz.

Gold broke below a $5,000–$5,200/oz trading range that had been in place for almost a month after the Federal Reserve kept interest rates unchanged on Wednesday, indicating uncertainty about the inflationary impact of the Iran war.

Stronger-than-expected producer price index inflation data for February preceded the Fed’s decision. The Fed’s remarks and the PPI report increased market speculation that the central bank would not have any room to lower interest rates in the near future.

The yellow metal has had difficulty since the start of the Iran war. This week, gold underperformed while oil prices kept rising due to the lack of signs of a de-escalation in the US-Israel war on Iran.

Iran retaliated bitterly after Israel attacked the South Pars gas field, the largest gas field in the world, on Wednesday, seemingly starting a new phase of the conflict. Tehran continued to attack targets in Israel and launched attacks on several significant energy facilities throughout the Middle East.

Iran’s closure of the Strait of Hormuz caused global oil and gas prices to soar, while military and shipping disruptions caused energy production throughout the Middle East to slow down.