Gold set for a two-week losing run as spiking oil prices spur inflation concerns

LONDON: Gold prices slipped on Friday and were headed for a two-week losing streak, as the yellow metal’s status as a safe haven demand took a hit from concerns over an inflationary shock from spiking oil prices.
The U.S. and Israel attack on Iran entered a thirteenth day on Friday, with no signs of slowing down. The effective closure of the Strait of Hormuz continues to disrupt oil and gas supply, prompting the U.S. Treasury Department to announce more waivers of some sanctioned Russian crude.
Spot gold XAU/USD fell 0.7% to $5,044.84/oz by 14:35 ET (18:35 GMT), while Gold Futures slipped 1.5% to $5,049.86/oz. Spot gold was set to lose about 2.5% for the week, while gold futures were on track for a 2.2% decline.
Since the conflict erupted in late February, the dollar has outperformed the gold as a safe haven of choice, even though the yellow metal is typically popular in times of geopolitical crisis. A stronger dollar weighs on gold as it makes it more expensive for foreign buyers.
Much of the oil and gas passing through the Strait of Hormuz is used in a range of products, such as fertilizer and plastics, meaning that the sudden uptick in their prices could lead to heavy inflationary pressures in economies around the world.
These fears may translate into central banks, including the Federal Reserve, reconsidering possible interest rate cuts in the near-term. Higher borrowing costs may attract more foreign investment, bolstering the appeal of the U.S. dollar. The dollar index, which track the greenback against a basket of rival currencies, has jumped as the conflict has intensified.