World gold prices dropped significantly, reaching their lowest point in nearly a month on 28/4. Spot prices fell by nearly 90 USD to 4,594 USD an ounce by the close of trading. During the session, prices dipped close to 4,550 USD, the lowest since 2/4. This morning, prices have edged up slightly to 4,602 USD.

This decline is attributed to persistent inflation fears, exacerbated by the ongoing conflict in the Middle East. US President Donald Trump's apparent dissatisfaction with Iran's latest peace proposal has heightened market uncertainty. Investors are also closely watching the outcome of this week's policy meeting of the US Federal Reserve (Fed).

World gold prices at times lost more than 100 USD during the 28/4 session. Chart: Kitco

"Recent developments have made the market pessimistic about the peace process in the Middle East," according to Peter Grant, Vice President of Zaner Metals. He told Reuters that "The Trump administration rejected Iran's latest proposal, leaving the Strait of Hormuz closed." Adding to these concerns, world crude oil prices rose by nearly 3% during the 28/4 session, further raising inflation worries ahead of the Fed meeting. Grant explained, "This pushed gold to a 4-week low."

Rising oil prices reduce the likelihood of central banks cutting interest rates. While gold is a traditional hedge against inflation, high interest rates, however, put pressure on the precious metal because it does not pay fixed interest.

Consequently, investors currently expect the Fed to maintain interest rates at this week's meeting. Statements by Fed Chair Jerome Powell will also be closely watched, as this could be the last meeting he attends as Chair. This week, many other central banks are also meeting, including those from Europe, the UK, and Canada.

In related news, the UAE will leave the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance from 1/5. However, in the short term, this is not expected to have a significant impact on the oil market, as the Strait of Hormuz remains blockaded.

Meanwhile, in the physical gold market, China imported a net of more than 47,800 tons from Hong Kong in March, an increase of nearly 2,500 tons compared to the previous month. China is currently the world's largest gold consumer.

Ha Thu (according to Reuters)