Gold prices declined on Thursday as there were no signs of easing in the escalating conflict in the Middle East, dampening recent optimism over slowing inflation and raising concerns that higher oil prices could lead to higher interest rates.
Spot gold fell 0.6% to $4,034.42 per ounce, while U.S. gold futures for August delivery slipped 0.3% to $4,039.90 per ounce.
Oil prices extended gains for a fourth consecutive session after the United States launched two waves of strikes against Iranian coastal air defense systems and missile sites following the reimposition of a naval blockade on Iranian ports.
Iran responded by targeting U.S. military sites in neighboring countries, describing the confrontation as a “war of survival” with the United States.
U.S. consumer and producer price inflation slowed in June, helped by lower energy costs, reinforcing evidence that inflation had been easing before the latest escalation in the regional conflict.
However, the slowdown was not sufficient to convince financial markets that the Federal Reserve would refrain from raising interest rates later this year.
According to data from the CME FedWatch Tool, traders continue to assign a 73% probability that the Federal Reserve will raise interest rates in December.
Federal Reserve Chair Kevin Warsh reiterated his commitment to bringing inflation down but did not indicate how the central bank intends to achieve that objective.
Among other precious metals, spot silver fell 1.1% to $57.14 per ounce, platinum declined 0.6% to $1,664.00 per ounce, and palladium edged down 0.3% to $1,309.86 per ounce.
Reuters
