Gold drops close to $4,750 as concerns over oil-fueled inflation pressure the market before US CPI figures are released

Gold Prices Edge Lower Amid Ongoing Geopolitical Tensions

During the early hours of Friday's Asian trading session, gold (XAU/USD) slipped slightly, hovering around $4,760. The precious metal's decline is attributed to persistent uncertainty surrounding the fragile ceasefire between the US and Iran, as well as escalating conflict in the Middle East, including the shutdown of the Strait of Hormuz.

According to Bloomberg, Israeli Prime Minister Benjamin Netanyahu has called for direct negotiations with Beirut following a devastating attack that claimed over 300 lives in Lebanon—the deadliest incident of the conflict so far. This event has cast doubt on the stability of the US-Iran ceasefire. Meanwhile, Iran continues to enforce a near-complete blockade of the Strait of Hormuz, resulting in unprecedented disruptions to global energy supplies.

The recent surge in oil prices has intensified concerns about rising energy inflation, dampening hopes for imminent interest rate reductions and putting pressure on gold. Although gold is frequently sought as a safe haven during geopolitical turmoil, its lack of yield makes it less appealing when interest rates are elevated.

Market participants are awaiting the release of the US Consumer Price Index (CPI) inflation data for March, scheduled for later on Friday. Analysts anticipate headline CPI to increase by 3.3% year-over-year, up from 2.4% in February, largely due to rising oil prices amid the ongoing Middle East conflict. Should the CPI figures come in below expectations, it could weaken the US Dollar (USD) and potentially boost the price of USD-denominated commodities like gold in the short term.