Gold hits 11-week low on renewed US-Iran clashes

Shafaq News

Gold fell to an 11-week low on Wednesday, as oil prices rose on renewed hostilities between the U.S. and Iran, fuelling concerns about inflation and interest rate hikes.

Spot gold was down 1.3% at $4,206.08 per ounce by 0558 GMT, after hitting its lowest level since March 23. U.S. gold futures for August delivery shed 1.4% to $4,228.

"We're seeing a kind of ⁠readjustment broadly in what global central banks are going to do, and there's been a major hawkish shift," said Ilya Spivak, head of global macro at Tastylive.

The United States on Tuesday launched strikes against Iran after President Donald Trump said Tehran had shot down a U.S. Apache helicopter in the Strait of Hormuz.

Iran's Revolutionary Guards said they retaliated with attacks against a U.S. base in Jordan and 21 other targets in the Gulf on Wednesday.

Oil prices jumped 1%, keeping up expectations that interest rates would stay higher ⁠for longer.

While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

Traders are now pricing in a more than 70% chance of a U.S. rate hike by December, according to the CME FedWatch tool.

Markets are awaiting key ⁠U.S. inflation reports this week, including the May Consumer Price Index data later in the day and the Producer Price Index reading on Thursday, to gauge the Federal Reserve's monetary policy ⁠stance.

"If we can break the $4,100 level, I think the path of resistance fundamentally changes for gold, and we might be starting to look at $3,500 as ⁠the next level into the end of the year," Spivak said.

Spot silver fell 1.2% to $64.59 per ounce, platinum dropped 3% to $1,675.50, and palladium fell 1% to $1,209.36.

(REUTERS)

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