Gold Prices Tumble as Oil Surges Amid Escalating US-Iran Tensions
Gold prices plummeted on Thursday, September 10, hitting their lowest level in over a week. Spot gold fell nearly 2% to $4,313.58 per ounce before closing near $4,316. The sharp decline was fueled by a 'triple blow' of rising oil prices, increased inflationary pressures, and heightened expectations of Federal Reserve rate hikes.
The surge in oil prices was driven by escalating tensions between the US and Iran, with Houthi forces seizing the strategic port of Mocha on the Red Sea coast. This development echoes tensions in the Strait of Hormuz, where Saudi Arabia's crude exports are heavily dependent on Red Sea shipping routes. Brent crude rose over 6% to break through $105 per barrel, while U.S. crude surpassed $100.
The rise in oil prices has pushed up global inflation expectations, with the US Producer Price Index (PPI) data for August showing energy prices rising 4.2% month-on-month. This has led to a repricing of monetary policy expectations and further suppressed gold prices.