Gold Slumps Amid US-Iran Conflict, Rate-Hike Fears
Gold prices plummeted to their lowest in over three weeks on Wednesday, as escalating tensions between the US and Iran fueled rate-hike fears. Spot gold fell by 0.6% to $4,304.01 per ounce at 0017 GMT, its lowest since August 7.
The spike in oil prices following the renewed conflict added to inflation concerns, making it less likely that investors will opt for gold as a hedge against inflation. Higher interest rates, which are now priced in with a 67% chance of a rate hike at the Federal Reserve's policy meeting this month, also weighed on gold's appeal.
According to Bas Kooijman, CEO and asset manager of DHF Capital SA, 'A rebound in oil prices after renewed US-Iran tensions added to inflation concerns. A pricier crude could continue to tighten monetary policy expectations and drive yields higher, limiting any rebound potential for gold.'