Gold, silver close lower amid inflation concerns

Gold bars

Gold and silver prices declined on Wednesday, pressured by rising concerns over inflation driven by the energy shock and expectations that central banks will continue tightening borrowing costs.

June gold futures fell 1%, or $46.90, to $4,561.50 per ounce, marking a third consecutive negative session.

Silver futures for May dropped 2.25%, or $1.65, to $71.569 per ounce.

This coincided with a rise in the US dollar and sovereign bond yields in the UK and the US, amid expectations that central banks will either keep interest rates unchanged or raise them in response to inflationary pressures linked to the Middle East war and the closure of the Strait of Hormuz.

The Federal Reserve kept interest rates unchanged today, as widely expected, citing uncertainty related to the ongoing conflict.

Separately, the World Gold Council reported that gold demand rose 2% year-on-year in Q1, driven by a surge in bar and coin purchases and a 3% increase in central bank buying, partially offsetting a 23% decline in jewelry demand.