Gold falls as dollar strength and oil-driven inflation dim rate-cut hopes

Spot gold fell 0.6% to $4,718.98 per ounce, its lowest level since April 7, as a stronger dollar and rising real interest rate expectations eroded the metal’s appeal. The dollar strengthened 0.4% amid failed U.S.-Iran peace talks, which also sent oil prices above $100 a barrel. Higher energy costs reignited inflation fears, pushing traders to price in little chance of a Federal Reserve rate cut in 2024. Before the Middle East conflict began on February 28, two rate cuts were expected this year. Now, the prospect of sustained high interest rates has increased the opportunity cost of holding non-yielding assets. A stronger dollar further dampened demand, making gold more expensive for foreign buyers. Spot gold has fallen more than 11% since the war began.