Spot gold shed 3.7% to settle at $4,818.88/oz, its lowest level since early February

Gold prices hit an over one-month low on Wednesday, extending its decline to a sixth straight day amid uncertainty over the impact of surging oil prices on inflation and the economy.

Spot gold shed 3.7% to settle at $4,818.88/oz, its lowest level since early February. Meanwhile, gold futures declined 3.7% as well to settle at $4,823.90/oz.

An escalating war in the Middle East offered limited support to gold, which struggled to remain above $5,000/oz this week even as Iran continued its attacks on the U.S. and Israel in the region, drawing retaliatory attacks from the two countries.

Oil prices remained perched above $100 a barrel after an attack on the largest natural gas field in the world shared by Iran and Qatar.

Gold has made a valiant effort to hold within a relatively tight range. But following some failed attempts to break out above resistance at $5,200 last week, it now looks as if the bears may be getting the upper hand. Much now depends on whether buyers come in to support gold if prices fall further, David Morrison, senior market analyst at Trade Nation, said.

The trouble for the bulls, as things currently stand, is that there’s no appetite for gold as a ‘flight to safety’ trade. No doubt many would-be purchasers have been put off by gold’s plunge from record highs at the end of January, he said.

Markets fear the inflationary impact of the war, especially as oil prices have risen to near four-year highs after supply through the Strait of Hormuz was disrupted.

Energy-fuelled inflation could elicit a more hawkish stance from central banks, with the Reserve Bank of Australia raising interest rates on Tuesday and warning of inflationary pressures from the war.