Spot bullion was down more than 3% after the latest comments by Trump, who has vacillated from threats of intensified attacks to touting that a deal is within reach since almost the start of the conflict.
Earlier, US economic data showed headline inflation accelerating the most in more than three years, fueling ongoing worries that the Fed will need to start raising rates.
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“The market continues to worry about inflation and the possibility of restrictive policy,” said Bart Melek, global head of commodity strategy at TD Securities. “The higher possible carry and real rates are the main reason.”
American forces struck Iranian sites near the Strait of Hormuz after Trump blamed Tehran for shooting down a US helicopter off the coast of Oman. Tehran’s Islamic Revolutionary Guard Corps launched missiles at four American targets. On Wednesday, Trump told reporters: “We’re going to be attacking them, attacking them very hard.”
The latest clashes threaten a fragile ceasefire and risk extending the near-total closure of Hormuz, a vital transit point for energy shipments from the Middle East to global markets. Oil prices jumped.
Gold is about 22% below where it was trading before the Iran war broke out at the end of February. Higher rates are generally considered bearish for gold because it doesn’t pay interest or dividends.
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“We expect price action to become more vulnerable in the near term,” as the prospect of a rate hike increases, Suki Cooper, global head of commodities research at Standard Chartered Plc, said in a note. “Middle East headlines also remain important; a de-escalation would likely see gold recover as liquidity needs ease.”
Spot gold was down 3.2% to $4,125.61 an ounce at 12:41 p.m. in New York, the lowest intraday price since March. Silver fell 0.6%. Platinum dropped, while palladium rose. The Bloomberg Dollar Spot Index, a gauge of the US currency, declined 0.1%.
(Edited by : Jomy Jos Pullokaran)
