Is gold set for deeper losses as oil dims rate-cut hopes?

Gold prices were little changed on Friday in thin Asian trade, hovering near the $4,620–$4,630 range but remaining on course for a weekly decline as elevated crude oil prices kept inflation concerns alive and reinforced expectations that borrowing costs across major economies will stay higher for longer.

Reduced liquidity from public holidays in China and India compounded the cautious tone, leaving bullion without a clear directional catalyst ahead of the weekend.

Gold spot price and weekly trajectory

Spot gold was trading at around $4,620 per ounce in early Friday Asian trade, having staged a modest recovery from a one-month low of roughly $4,548 hit earlier in the week.

US gold futures for June delivery edged up 0.1% to $4,632.70. Despite the rebound, the metal remained on track for a weekly loss of about 1.5% to 1.8%, reflecting a week shaped by firm central bank signals and elevated energy prices.

Oil strength keeps rate-cut hopes in check

Brent crude remained above the $110 a barrel level through the week, after sharp gains driven by escalating geopolitical tensions and supply concerns.

The move in oil has kept markets focused on the inflationary impact of higher energy costs, even as headlines around tensions involving Iran continue to drive volatility in crude markets.

Elevated oil is a double-edged sword for gold.

While it supports bullion’s role as an inflation hedge, the prospect of persistently higher consumer prices keeps central banks cautious — and higher-for-longer interest rates reduce the appeal of non-yielding assets by increasing the opportunity cost of holding them.

A week of central bank holds

The European Central Bank and the Bank of England both held rates steady, with the ECB maintaining its deposit rate at 2% and the BoE holding at 3.75%, joining the US Federal Reserve, which voted 8–4 to keep its benchmark rate in a range of 3.5% to 3.75%.

Policymakers broadly pointed to geopolitical and energy-driven inflation uncertainty as a reason for caution, while keeping future policy options open.

The Bank of Japan also left policy unchanged at its late-April meeting, maintaining an accommodative stance with only modest adjustments to its framework.

The BoE said in March it expects inflation to be around 3% in the second quarter and could rise to as much as 3.5% in the third quarter, driven in part by higher energy prices, while warning that uncertainty remains elevated.

The ECB similarly lifted its inflation outlook and trimmed growth projections, reflecting the impact of higher energy costs on incomes and confidence.

Global brokerages have begun to reassess rate-cut expectations.

Forecasts that previously pointed to multiple US rate cuts in 2026 have been scaled back, with markets now leaning toward a more prolonged period of steady policy.

The European outlook has also shifted, with easing expectations pared back as inflation risks persist.