Gold price slips as Mideast tensions stoke Fed hike bets
Rising oil prices revive inflation concerns and rate-hike bets, offsetting support from Treasury bond buybacks.
Gold prices fell on Monday as heightened Middle East tensions drove up oil and Treasury yields, sparking concerns about inflation and the likelihood of the Federal Reserve raising interest rates in September. The value of bullion decreased by 0.5%, reaching $4,434.78 per ounce in New York trading. US crude oil prices surged above $85 a barrel, while traders now consider a more than 60% probability of a September rate increase following Fed Chairman Kevin Warsh's pledge to combat inflation.
Gold has gained roughly 10% in August, setting the stage for its largest monthly increase since January. This surge stems from the US Treasury's initiative to boost bond buybacks, reigniting the debasement trade. MKS PAMP SA's Nicky Shiels, who oversees metals research and strategy, describes the relationship between the Treasury and the Fed as a "tug of war" and anticipates the debasement trade to sustain gold prices into September.
Recent US-Iranian exchanges of fire, marking the first such incidents in about a month, saw President Trump vow a response to Iranian attacks on US forces. Spot prices for silver slipped by 0.1% to $66.30, while platinum and palladium also experienced declines.
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