Gold Prices Slip as Mideast Tensions Fuel Rate Hike Bets

Renewed tensions in the Middle East have pushed gold prices down on Monday as investors bet on a possible interest rate hike by the Federal Reserve in September.

The price of gold fell 0.5% to $4,434.78 an ounce after US crude oil climbed above $85 per barrel, fuelling inflation concerns and fueling bets on a rate hike.

Despite the decline, gold remains up about 10% this month, heading for its biggest monthly gain since January due to the US Treasury's plan to ramp up bond buybacks, which has revived the debasement trade.

Nicky Shiels, head of research and metals strategy at MKS PAMP SA, expects the debasement trade to support gold into September, describing the relationship between the Treasury and Fed as a 'tug of war'.