Gold Tumbles to Three-Week Low as Middle East Tensions Fuel Rate-Hike Fears
Gold prices plummeted to their lowest in over three weeks on September 2 as escalating Middle East tensions fueled rate-hike fears. Spot gold fell 0.6% to $4,302.99 per ounce by 12:25 pm Singapore time, its lowest since August 7. US gold futures for December delivery also dropped 1.1% to $4,349.90.
The Middle East conflict lifted oil prices for a third straight session, stoking inflation and rate-hike concerns. Bas Kooijman, CEO of DHF Capital S.A., said 'A rebound in oil prices after renewed US-Iran tensions added to inflation concerns.' He noted that this could limit any potential rebound for gold.
Despite being seen as an inflation hedge, higher interest rates weigh on gold's appeal since it offers no yield. The market is pricing in a 67% chance of a rate hike at the Federal Reserve's policy meeting in September, according to the CME FedWatch Tool.
Investors are awaiting the ADP employment report later in the day and the more crucial nonfarm payrolls data on September 4. Softer figures could ease pressure on gold, while stronger data or hawkish Fed comments may extend its decline.