Spot gold prices fell 0.5% to $4,035.67 per ounce as a rally in crude oil reignited concerns about global inflation and the trajectory of U.S. interest rates.
The decline marks a continuation of the precious metal's downward pressure, with prices hovering near one-week lows amid shifting risk sentiment.
The metal had previously climbed to $4,058 as soft jobs data and falling oil weighed on risk sentiment, but that support has eroded as energy prices rebounded.
The move underscores the complex interplay between energy markets and safe-haven assets.
While geopolitical tensions in West Asia have historically supported gold, the current dynamic sees rising oil prices acting as a headwind by fueling inflation expectations.
Investors are increasingly focused on the potential for the Federal Reserve to maintain higher rates for longer, or even consider hikes, to counteract energy-driven price pressures.
This development follows a period of volatility for gold, which recently broke below the $4,000 support level, on track for its worst monthly drop since 2008. The metal had previously climbed to $4,058 as soft jobs data and falling oil weighed on risk sentiment, but that support has eroded as energy prices rebounded. The cross-asset reaction highlights how quickly market narratives can shift when energy costs rise, challenging the traditional safe-haven bid for gold.