Gold Falls to Three-Week Low as MidEast Tensions Fuel Rate-Hike Fears

Gold prices have fallen to their lowest level in over three weeks due to escalating tensions in the Middle East. The conflict between the US and Iran has led to a surge in oil prices, which is fueling inflation concerns and rate-hike fears.

The price of spot gold has dropped 0.6% to $4,304.01 per ounce, its lowest since August 7. Meanwhile, US gold futures for December delivery have fallen by 1% to $4,350.80.

Bas Kooijman, CEO and asset manager of DHF Capital SA, believes that the rebound in oil prices will continue to tighten monetary policy expectations and drive yields higher, limiting any potential rebound for gold. He notes that while gold is often seen as an inflation hedge, higher interest rates can weigh on its appeal due to its lack of yield.

The ADP employment report is expected later today, with the more crucial nonfarm payrolls data due on Friday. If the figures come in softer than expected, it could ease pressure on gold prices. However, stronger data or more hawkish Fed comments may extend the decline.