Gold sees biggest weekly loss in six years, faces more downside as inflation threat sidelines central banks

Gold is experiencing its biggest weekly loss in six years, down over 8%, with prices dropping below the key 50-day moving average near $5,000/oz. Spot gold last traded around $4,584/oz, reflecting a sharp decline from the recent February-March rally that peaked at $5,420. Analyst Kelvin Wong characterizes the recent jump as a "dead cat bounce," signaling a likely multi-week bearish downtrend. The selloff is driven by rising energy prices fueling inflation concerns, causing central banks to pause or halt easing cycles, creating headwinds for gold. Silver has been hit even harder, declining nearly 14% this week to about $68.96/oz, marking its worst drop since January. Strategists like Rob Haworth note speculative long positions initiated above $5,000 are now underwater, potentially triggering further liquidations amid ongoing geopolitical uncertainty, especially regarding the Iran conflict and Strait of Hormuz supply risks. Looking ahead, gold’s near-term range is seen between $4,600 and $4,700, but extended conflict and sustained energy price inflation could push prices down toward the $4,000 level if the Fed is forced back into rate hikes. Conversely, a quick resolution with falling oil prices may rekindle central bank appetite for gold, supporting a return to levels above $5,000/oz. Despite current volatility and technical damage, the long-term outlook remains constructive due to persistent geopolitical tensions and elevated government debt. Investors are advised to watch developments in the Middle East and inflation trajectory closely, as these will be key catalysts determining gold’s direction. Market positioning and speculative flows may amplify swings, with the evolving macro backdrop critical for risk management and tactical decisions.