Gold slides as dollar index gains on rate worries

The precious metal retreated from recent highs, sliding beneath the $5,100 threshold as the greenback strengthened and traders recalibrated their portfolios. Spot gold lost 1.55 percent, trading at $5,090 as of 0830GMT after dipping to $5,015 earlier in the session. Meanwhile, the US dollar index climbed 0.55 percent to 99.5, making non-yielding bullion more expensive for holders of other currencies and putting downward pressure on prices.

Inflation fears and Fed outlook weigh on prices

Oil prices surging above $100 per barrel for the first time since 2022 have reignited concerns about global inflation, prompting markets to scale back bets on imminent rate cuts by the Federal Reserve. Higher energy costs typically boost inflation expectations, which in turn influence central bank policy and diminish the appeal of assets like gold that offer no yield. For energy-importing nations like Türkiye, the combination of a stronger dollar and rising oil prices presents a dual challenge, potentially stoking domestic inflation and straining local currencies.

Geopolitical tensions offer limited support

While escalating conflict with Iran and disruptions in the strategic Strait of Hormuz continue to provide a floor for bullion prices, the market remains in a consolidation phase. The initial price spike following joint US-Israeli strikes on Tehran earlier this month has largely evaporated as macroeconomic factors take precedence. Analysts suggest that safe-haven demand alone is insufficient to counter the headwinds created by a robust dollar and shifting monetary policy expectations, leaving gold vulnerable to further downside in the near term.