Gold rises, but gains capped by elevated oil prices

May 05, 2026 (MLN): Gold prices edged higher on Tuesday, recovering from a more than one-month low touched in the previous session.

However, gains remained limited as rising oil prices fueled inflation concerns and added uncertainty to the outlook for U.S. interest rates.

Currently, spot gold is slightly up 0.38% to $4,550.59 an ounce as of [10:12 am] PST, according to data reported by Mettis Global.

The U.S. dollar strengthened, while Brent crude oil held above $113 per barrel amid ongoing tensions between the United States and Iran over the Strait of Hormuz.

A stronger dollar typically makes gold more expensive for holders of other currencies, dampening demand.

At the same time, elevated crude prices are stoking inflation fears, which could prompt tighter monetary policy.

While gold is traditionally seen as a hedge against inflation, higher interest rates tend to reduce its appeal by boosting returns on yield-bearing assets.

Market expectations around the Federal Reserve have also shifted.

Traders are now largely ruling out rate cuts this year, with markets pricing in a 37% probability of a rate hike by March 2027 up from expectations of a potential cut just a week ago, according to CNBC.

Geopolitical tensions intensified on Monday, as U.S. and Iranian forces exchanged fresh attacks in the Gulf region, disrupting a fragile truce.

Investors are now turning their attention to a series of key U.S. economic indicators due later this week, including job openings data, the ADP employment report, and April’s nonfarm payrolls report, which could provide further clues on the Federal Reserve’s policy path.

In other precious metals, silver rose 0.4% to $73.03 per ounce, platinum gained 1.3% to $1,970.85, and palladium climbed 1.2% to $1,497.91.

Copyright Mettis Link News