Gold Sinks as Iran Tensions Fuel Oil Price Surge and Rate-Hike Expectations
Gold prices plummeted to their lowest level in over three weeks on Wednesday as escalating US-Iran tensions pushed oil prices higher and strengthened expectations that the Federal Reserve may need to raise interest rates to combat inflation.
The price of gold fell 0.4% to $4,311.83 an ounce, while the price of platinum declined 0.9% to $4,358.24. The price of silver dropped 0.4% to $63.82 an ounce, and the price of palladium declined 0.4% to $1,736.87.
The latest pressure on gold followed a fresh round of US strikes against targets in Iran on Tuesday, which Tehran retaliated against, marking a sharp escalation after nearly a month of relative calm.
As a result, oil prices surged above $95 a barrel and $91, as traders assessed the risk that a prolonged conflict could disrupt energy flows through the Strait of Hormuz. Higher oil prices can feed directly into inflation, making it more likely for the Federal Reserve to raise interest rates.