Spot gold prices retreated to $4,000.55 per ounce, marking a 0.4% decline as investors recalibrated their positioning amid shifting macroeconomic signals.
The pullback in the precious metal comes as mounting bets on Federal Reserve rate hikes overshadow the traditional safe-haven appeal of bullion, despite escalating tensions in West Asia that have historically supported gold demand.
Gold is on track to record its largest weekly loss since early June, erasing a brief weekly gain of more than 2% that had previously halted a four-week losing streak.
The primary driver of the sell-off is the sharp advance in oil prices, which have climbed above $90 per barrel.
This energy surge is fueling fresh inflation fears, leading markets to price in a more hawkish stance from the Federal Reserve.
As the cost of energy rises, the real yield environment becomes less favorable for non-yielding assets like gold, creating a headwind for the metal even as geopolitical risks remain elevated.
Gold is on track to record its largest weekly loss since early June, erasing a brief weekly gain of more than 2% that had previously halted a four-week losing streak.