Business · India Bureau
Gold retreats as dollar gains on US jobs data, geopolitical tensions
Gold prices fell Friday as a strengthening US dollar made the precious metal more expensive for international buyers. Strong American employment data and Middle East tensions supported the case for higher interest rates, weighing on the non-yielding asset.
LSN India ·
Gold struggled to maintain gains on Friday as the US dollar index climbed, raising the cost of bullion for buyers outside the United States. The precious metal, which trades in dollars globally, typically becomes less attractive when the greenback strengthens.
Robust US jobs figures released during the week reinforced expectations among market participants that the Federal Reserve may need to maintain higher interest rates for longer to combat inflation. This outlook pressured gold, which offers no yield and becomes less compelling in a high-rate environment.
Geopolitical tensions in the Middle East, including strikes near the Strait of Hormuz, added to rate-hike expectations by raising concerns about oil supply disruptions and renewed inflationary pressures. These factors combined to support the dollar and limited gold's upside potential.
The combination of currency strength and shifting interest-rate expectations has created headwinds for gold investors. Traders are reassessing positions as the likelihood of prolonged higher rates reduces the appeal of holding non-yielding assets, with the precious metal facing continued pressure until economic data signals a shift in monetary policy direction.