Gold Prices Decline Amid US-Iran Tensions, Hawkish Fed Stance
Gold prices declined on Monday after a two-day drop as investors digested the Federal Reserve's more hawkish inflation stance. The U.S.-Iran tensions, which saw strikes from both sides, also kept oil prices elevated and added to concerns that higher energy costs could keep interest rates high for longer.
The US Dollar Index rose to 99.55, while gold futures slipped to $4,480.00. Gold's retreat has come as the U.S. and Iran exchanged strikes for the first time in a month, adding a new layer of uncertainty to energy markets.
Tony Sycamore, senior market analyst at IG, said that the recent $300 decline from last week's high near $4,697 to Monday's low around $4,397 reflected the combination of Warsh's hawkish Jackson Hole speech and renewed tensions around Hormuz. Markets now price more than a 60% probability of a 25 basis point Fed rate increase at the September 15-16 meeting.