Gold Prices Slip Amid Escalating Middle East Tensions and Interest Rate Hopes

Gold prices retreated on Wednesday as escalating Middle East tensions fueled concerns about inflation and interest rate hikes. The US producer price index data is due later this week, which could further boost bets on elevated interest rates.

The spot gold price fell 0.1% to $4,349.44 per ounce, while US gold futures for December delivery dropped 1% to $4,393.30. Rising crude prices tend to put upward pressure on inflation, as higher energy costs filter through the broader economy.

Brent crude prices surged for a fourth consecutive session, which could weigh on the appeal of non-interest-bearing bullion. Although gold is widely regarded as an inflation hedge, elevated rates make it less attractive. The Bank of England will maintain its Bank Rate at 3.75% for the remainder of the year and through mid-2027, according to a Reuters poll.