Gold Price Forecast: Will the Oil Surge Put Pressure on XAUUSD?
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Key Points:
- Oil’s breakout has shifted gold’s focus from geopolitical risk to inflation pressure and rising yields.
- Gold may stay weak in the short term as higher energy prices keep the market cautious on inflation.
- The broader gold outlook remains constructive if oil prices peak and safe-haven demand returns
The rally in oil prices is reigniting concerns about inflation, and that has led to higher Treasury yields, weighing on the gold price. Brent crude oil has passed $105 and is heading towards $110, and that has altered the market’s response to the Persian Gulf crisis. Typically, geopolitical risk provides a safe-haven bid for gold. But this crisis is first affecting the oil market, which means that inflation and yields are more significant in the short term.