Gold set for weekly drop as higher oil prices stoke inflation fears

Gold held steady on Friday, but was on track ‌for a weekly drop as elevated oil prices fuelled fears of inflation and higher-for-longer interest rates amid stalled US-Iran peace talks. Spot gold was down 0.1% at $4,686.29 per ounce, as of 0230 GMT. The metal is down ​3% so far this week after a four-week winning run. US gold futures for June ​delivery fell 0.5% to $4,702. Brent crude prices have risen over 17% so far ⁠this week to hover above $105 a barrel, as the key Strait of Hormuz remained largely ​closed despite an extension of the Iran ceasefire. As long as this risk of prolonged closure of the ​Strait of Hormuz is there, oil will continue to trade at elevated levels, pressuring gold prices, said Kelvin Wong, a senior market analyst at OANDA. Higher crude oil prices can stoke inflation by raising transportation and production ​costs, increasing the likelihood of higher interest rates.