Gold prices continued their decline deeper into the seventh day amid tensions in the Middle East and rising US inflation, which is a major obstacle for the Fed to ease its policy.
At 8.30 am, gold prices were at $4,843, up 0.52% since it opened in early trading Thursday in the Asian session.
The latest reports on the conflict in Iran revealed Israel's attack on the Pars gas energy site. In response, Tehran threatened to attack enemy infrastructure and issued strong warnings against several target areas.
These geopolitical tensions have triggered a significant surge in WTI and Brent crude oil prices, which are now approaching their record highs recorded on March 9.
In the United States, Producer Price Index (PPI) data for February showed a higher-than-expected increase. PPI grew to 3.4%, beating market forecasts and a reading of 2.9% in January.
This hot inflation data has weakened investors' hopes of seeing an interest rate cut by the Federal Reserve (Fed) in the near future.
In the wake of this, the FOMC meeting for March saw policymakers agree to keep interest rates steady at 3.75%, in line with broad market expectations.
Investors' focus is now fully shifting to the Fed's strategy in setting decisions for the upcoming meeting.
In his press conference, Fed Chairman Jerome Powell stressed that the current level of monetary policy is still considered appropriate to support the employment sector and achieve the 2% inflation target.
He stated that the Fed will continue to monitor economic data closely and will not rush to make drastic changes, in order to maintain its commitment to price stability.
However, the money market is now seen as less confident about the Fed's policy easing measures throughout 2026. This cautious sentiment is driven by the risk of rising energy prices, which is increasingly impacted by the ongoing conflict in the Middle East.
