Gold hits 3-week low as Mideast tensions fan rate-hike fears
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Gold hit a three-week low yesterday amid rising Middle East tensions that drove up oil prices, raising concerns of inflation and rate hikes. By 0017 GMT, spot gold was down 0.6 percent at US$4,304.01 per ounce, its lowest since August 7. The price was on track for a fourth consecutive day of losses and was below the 200-day moving average. US gold futures for December delivery declined by one percent to US$4,350.80.
The US dollar remained strong, making dollar-denominated metals more expensive for buyers using other currencies. The US launched airstrikes against Iran on Tuesday, leading to Iranian retaliation in the most serious escalation in weeks. This escalation contributed to a third consecutive day of oil price increases. Higher oil prices added to inflation concerns and could tighten monetary policy expectations, driving yields higher and limiting any rebound potential for gold.
Bas Kooijman, CEO and asset manager of DHF Capital SA, noted that although gold is considered an inflation hedge, higher interest rates reduce its appeal as it provides no yield. Traders are pricing a 67 percent chance of a rate hike at the Federal Reserve's policy meeting that month, according to the CME FedWatch Tool.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
