Gold prices fell by more than 1% in early Asian trading on Monday as fears over a potential closure of the Strait of Hormuz drove oil prices sharply higher, boosting expectations that interest rates may remain elevated to counter inflationary pressures.
Spot gold declined 1.2% to $4,072.78 per ounce as of 00:50 GMT, while U.S. gold futures for August delivery fell 0.8% to $4,081.70 per ounce.
The renewed conflict involving Iran intensified at the start of the week after Tehran targeted several Gulf states on Sunday and announced the renewed closure of the strategic Strait of Hormuz, while the United States confirmed it had carried out strikes against Iran.
Oil prices jumped by around 4%, the U.S. dollar strengthened, and major Asian stock markets declined as fighting escalated across the Gulf region.
Investors are expected to focus this week on the Federal Reserve Chair Kevin Warsh’s first semiannual testimony before Congress, as well as key U.S. economic data releases, including the Consumer Price Index (CPI), Producer Price Index (PPI), and June retail sales figures, for further clues on the outlook for economic growth, inflation, and monetary policy.
In its monetary policy report submitted to Congress on Friday, the Federal Reserve said inflation in the United States accelerated further this spring, citing the growing impact of tariffs, rising energy costs linked to the war, and the rapid expansion of artificial intelligence development, all of which intensified price pressures that had already become entrenched last year.
In India, gold traded at a significant discount last week due to heightened price volatility, while demand in China remained stable. China’s central bank reported in June its largest monthly increase in gold reserves in more than two and a half years.
Among other precious metals:
* Spot silver fell 1.6% to $58.89 per ounce.
* Platinum declined 1.1% to $1,610.22 per ounce.
* Palladium slipped 1.3% to $1,260.15 per ounce.
Reuters
