Gold Slumps Amid Middle East Tensions and Inflation Fears
The price of gold has dropped to near $4,050 as tensions in the Middle East escalate and concerns about inflation rise. The Houthi militant group in Yemen claimed responsibility for attacking two Saudi oil tankers in the Red Sea, which had 'violated' its blockade of Saudi ports. This development has fueled worries about a wider conflict in the region.
US President Donald Trump warned the Houthis that if they attacked again, the US would inflict 'major military punishment' upon both them and Iran. He also mentioned considering a massive attack on Iran, stating it would be 'bigger than ever before,' adding 'I am close to making a decision. We are all set for it.'
The potential for war in the Middle East has boosted inflation fears, leading money markets to price in a nearly 35.8% chance of a rate hike from the Federal Reserve this month and an 82.1% probability of at least a quarter-point hike in September.