Gold Sells Off as Oil Prices Soar Ahead of FOMC Decision
The gold price has continued to decline on Monday as investors react to rising crude oil prices and the upcoming Federal Reserve interest rate decision. The price of Brent, the global benchmark for crude oil, jumped to $108, its highest level since May 20th. West Texas Intermediate (WTI) rose to $103.
The escalating tensions between the United States and Iran are contributing to the surge in oil prices. Last week, both sides launched strikes, with Iran targeting oil tankers attempting to cross the Strait of Hormuz. Iraqi groups have also targeted Saudi Arabia's East-West pipeline, forcing it to close.
The rising oil prices are putting pressure on the gold price as they indicate higher US inflation rates. The Federal Reserve will likely raise interest rates in its upcoming meeting on Wednesday, which is already priced into the market. However, if the Fed's message is less aggressive than expected, yields could drop quickly, hurting gold but benefiting Treasuries.