Gold falls below $5,100 as rising oil prices stoke inflation concerns

NEW YORK (March 12) Gold price (XAU/USD) faces some selling pressure near $5,090 during the early Asian session on Friday. The precious metal extends the decline amid a stronger US Dollar (USD) and higher Treasury yields. The release of the US Personal Consumption Expenditures (PCE) Price Index report for January will take center stage later on Friday. 

Iran’s new supreme leader, Mojtaba Khamenei, said that the crucial Strait of Hormuz should remain closed and that Iran will continue attacks on its Persian Gulf neighbors, per Bloomberg. US President Donald Trump called Iran "a nation of terror and hate" and said the situation is "moving along very rapidly" toward his guarantee of limited military involvement in the region.

Traders will closely monitor the developments surrounding the Middle East situation. Any signs of a prolonged war in the region could boost a traditional safe-haven asset such as Gold in the near term. 

Nonetheless, the ongoing war in the Middle East has stoked fears of inflation rising in the US, which increases the likelihood of the US Federal Reserve (Fed) keeping interest rates higher for longer. Higher rates tend to increase the relative appeal of yielding assets such as government bonds versus non-yielding precious metals like Gold.

FXStreet