Oil-driven inflation fears delay Fed rate cuts, weighing on gold

Gold slipped 0.20% to $4,734 as rising crude oil prices reignited inflation concerns, reducing the likelihood of imminent Federal Reserve rate cuts and lifting real yields. The move higher in oil, fueled by a US blockade in the Strait of Hormuz and escalating Middle East tensions, pushed the US 10-year Treasury yield to 4.30%, increasing the opportunity cost of holding non-interest-bearing gold. Despite brief safe-haven demand following comments from former President Trump on Iran, investors pared dovish expectations after the March Consumer Price Index rose 3.3% year-on-year—up nearly a full percentage point from February. San Francisco Fed President Mary Daly confirmed that the central bank is more likely to hold rates steady than cut them, especially if inflation remains elevated. With Treasury yields holding firm and the dollar regaining ground, gold faces headwinds even as technical support looms near the $4,658–$4,668 confluence of the 20- and 100-day simple moving averages. The terminal effect: higher oil-driven inflation expectations are delaying rate cuts, reinforcing a stronger dollar and higher yields, which in turn suppress gold’s appeal.