Gold edges lower as hopes for U.S. rate cut fade amid rising energy costs

2026-03-16 - 07:15

Gold prices dipped slightly on Monday, pressured by fading hopes of a near-term U.S. interest rate cut amid rising energy costs, although a weaker dollar helped limit losses. Spot gold fell 0.2% to $5,007.58 an ounce by 02:40 GMT, while U.S. gold futures for April delivery declined 1% to $5,011.10. The dollar’s slight weakness made dollar-denominated commodities like gold more affordable for holders of other currencies. 10-year U.S. Treasury yields have declined, boosting gold’s appeal as a safe-haven asset that does not generate interest. OCBC strategist Christopher Wong explained: “If higher energy prices lead to increased inflation and the Federal Reserve remains cautious about cutting interest rates, this could keep real yields high, which is usually a drag on gold.” Oil prices remained above $100 a barrel as the U.S.-Israeli conflict with Iran entered its third week, threatening oil infrastructure and keeping the Strait of Hormuz closed—the largest disruption to global supplies in history. Higher oil prices push up transportation and production costs, driving inflation, reports Al-Rai daily. Gold serves as a hedge against inflation, but rising interest rates make yield-generating assets more attractive, limiting demand for the yellow metal. The Federal Reserve is widely expected to hold rates steady for the second consecutive meeting when it releases its monetary policy statement on Wednesday. Meanwhile, U.S. President Donald Trump said his administration is negotiating with seven countries to secure the Strait of Hormuz. Trump also warned of potential further attacks on Kharg Island, Iran’s main oil export hub, and indicated he is not ready to reach a settlement to end the conflict. Among other precious metals: Silver fell 1.2% to $79.57 an ounce (spot trading) Platinum rose 0.8% to $2,042.98 an ounce Palladium gained 1% to $1,566.91 an ounce