While bullion has been weighed down in recent weeks over concerns that rates will stay steady, gold is still up more than 10% this year. Prices have been boosted by geopolitical risks and by threats to the Fed’s independence that are supporting demand.

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Gold declined for a sixth day, its longest losing streak since late 2024, as surging energy prices and a hotter-than-expected inflation report added to speculation that the Federal Reserve will hold off from cutting interest rates this year.

Bullion tumbled as much as 3.4%, reaching its lowest level in more than a month. Crude rallied on signs of escalation in the Iran war that puts more energy supplies at risk. The latest development in the Middle East conflict led to a selloff across risk assets, including equities, which forced some investors to sell their gold holdings to raise cash.

It “looks like a cross-asset repositioning,” said Ewa Manthey, a commodity strategist at ING Bank. “Oil is reacting to supply risk, while gold’s dip could be some profit-taking and broader liquidation alongside the risk selloff and firmer dollar and real yields.”

Earlier, a report on US February producer prices showed increases that were bigger than economists estimated.

Markets have further downgraded the chances of a rate cut this year. That’s negative for non-yielding bullion as it typically performs well in a lower rate environment. In December, Fed officials had projected a quarter-point rate cut this year.

The US central bank is expected to keep rates unchanged at its policy meeting later Wednesday.

While bullion has been weighed down in recent weeks over concerns that rates will stay steady, gold is still up more than 10% this year. Prices have been boosted by geopolitical risks and by threats to the Fed’s independence that are supporting demand.

Concerns about stagflation — a combination of slower growth and high inflation — could be supportive of bullion in the longer term as investors look for alternative stores of value.

Spot gold fell 2.7% to $4 869.49 an ounce by late morning in New York. Silver lost 3.1% to $76.80 an ounce. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index rose 0.2%.