Gold Prices Tumble Amid Middle East Tensions and Rate Hike Fears
Gold prices fell on Wednesday to their lowest level in over three weeks as escalating tensions in the Middle East fueled concerns about inflation and rate hikes. The conflict between the US and Iran drove up oil prices, making crude more expensive and tightening monetary policy expectations.
The spot gold price dropped 0.6% to $4,304.01 per ounce, its lowest since August 7. US gold futures for December delivery fell 1% to $4,350.80. The US dollar remained strong, increasing the cost of metals for buyers using other currencies.
Analysts pointed out that a rebound in oil prices and rising Treasury yields are weighing on gold's appeal as an inflation hedge. With no yield to offer, investors may be less likely to hold onto gold if interest rates continue to rise.
The Federal Reserve's policy meeting this month is expected to bring a 67% chance of a rate hike, according to the CME FedWatch Tool. A softer ADP employment report later in the day and nonfarm payrolls data on Friday may influence gold prices.