Tensions with Iran Weigh on Gold Price

The price of gold (XAU/USD) fell to around $4,400 during the early Asian session on Thursday, weighed down by escalating tensions between the United States and Iran.

A senior Iranian official stated that Washington and Tehran remain at odds over efforts to agree a permanent end to the war in the Gulf, with no progress made in talks to revive the interim deal agreed in June.

Renewed tensions in the Middle East and the continued closure of the Strait of Hormuz are pressuring gold as they raise oil-driven inflation fears. Seema Shah, chief global strategist at Principal Asset Management, said 'With the Strait of Hormuz still shut, upside inflation risks will remain top of mind for the foreseeable future.'

However, a tame reading of US inflation eased pressure on the US Federal Reserve (Fed) to raise interest rates as soon as next month. The latest US July Consumer Price Index (CPI) inflation moderated across a range of goods and services, cooling September Fed rate hike expectations.