Gold hits over 3-week low as Iran war tensions fan US rate hike fears
Prices head for a fourth straight session of losses and remain below the 200-day moving average
Gold prices tumbled to their lowest level in over three weeks on Wednesday (Sep 2), plummeting to US$4,304.01 per ounce, as heightened Middle East tensions spurred oil price increases and fueled concerns about inflation and potential U.S. rate hikes. The precious metal was down 0.6 percent by 0017 GMT, remaining below the 200-day moving average and entering a fourth consecutive session of losses.
US gold futures for December delivery fell 1 percent to US$4,350.80. The U.S. dollar remained strong, making metals priced in greenbacks more expensive for international buyers. The U.S. launched airstrikes against Iran on Tuesday, sparking Iranian retaliation and escalating the conflict to its most severe level in weeks. This, combined with a surge in oil prices for the third straight day and a rise in U.S. Treasury yields, dampened gold's appeal as an inflation hedge, as higher interest rates limit its value.
Analysts predict a 67 percent chance of a rate hike at the upcoming U.S. Federal Reserve meeting in September, with Fed Governor Michael Barr warning that if inflation doesn't subside quickly, it will be time to raise rates. The ADP employment report will be released later in the day, followed by crucial nonfarm payrolls data on Friday.
Softer figures could alleviate some pressure on gold, while robust data or more hawkish Fed comments may prolong the decline. Silver, platinum, and palladium also experienced declines, with spot silver falling 1 percent to US$63.60 per ounce, platinum edging down 1 percent to US$1,722.23, and palladium slipping 1.4 percent to US$1,292.21.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
