Gold Falls as War-Driven Inflation Fears Fuel Rate-Hike Bets
Gold Prices Decline as War and Inflation Fears Boost Rate Hike Expectations
Gold prices fell more than 1% on Tuesday, pressured by bets of higher U.S. interest rates this year as renewed U.S. military strikes on Iran dampened hopes for a peace deal, pushed up oil prices, and revived inflation concerns. Investors moved away from gold amid expectations of tighter monetary policy.
Markets Focus on Fed Rate Hike
Spot gold was down 1.3% at $4,511.23 per ounce as of 11:05 a.m. EDT. U.S. gold futures for June delivery fell 0.2% to $4,513.90. Jim Wyckoff, market analyst at American Gold Exchange, noted that bond markets are pricing in a rate increase by the Federal Reserve, which is negative for gold.
Oil Prices and Inflation Worries
Brent crude rose more than 4% amid uncertainty over a U.S.-Iran deal and shipping flows through the Strait of Hormuz. Rising oil prices feed into inflation as manufacturers pass on higher costs. Markets are closely watching the U.S. Personal Consumption Expenditures Price Index due on Thursday.
Technical Selling and UBS Gold Forecast
Wyckoff added that near-term technicals favor the bears, prompting technical selling. UBS lowered its year-end gold price target by $400 to $5,500 due to risks from higher yields and a stronger dollar. Silver fell 2.3%, platinum lost 1.3%, and palladium shed 1.3%.
Impacted Symbols
Symbols affected by this headline and their sentiment signals
GOLD (US$/OZ)
Gold price is directly pressured by rate hike expectations and a stronger dollar, the news is negative for gold.
Silver, like gold, loses value in a rising rate environment, but is also affected by industrial demand.
Platinum, while a precious metal, is less directly affected than gold; automotive demand is also a factor.
Palladium, like platinum, is indirectly affected by rate hikes, but supply constraints and automotive demand may support prices.
The news, analyses, and comments on this platform do not constitute investment advice. When making investment decisions, you should conduct your own research and consult with a qualified financial advisor if necessary. FiNews cannot be held responsible for any losses that may arise from the use of this information.
More Headlines
Tokyo Core Inflation Slows, Remains Below BOJ Target
Tokyo Core Inflation Slows, Remains Below BOJ Target
…Nikkei May Rise on Hopes for U.S.-Iran Peace Deal
Nikkei May Rise on Hopes for U.S.-Iran Peace Deal
…Australian Pension Fund HUB24 Faces Regulatory Scrutiny
Australian Pension Fund HUB24 Faces Regulatory Scrutiny
…