Gold extends decline as Middle East tensions bolster higher-for-longer rate view
GLD•Gold falls for a second session
Gold prices fell for a second straight session on Monday as renewed hostilities in the Middle East added to inflationary concerns and bolstered expectations that the U.S. Federal Reserve will keep interest rates higher for longer.
Spot gold XAU= slid 1.4% to $4,061.64 per ounce by 1100 GMT, while U.S. gold futures GCcv1 for August delivery were down 1.1% to $4,069.60.
Fed expectations and U.S. data in focus
Traders are pricing in about a 69% chance of a U.S. Fed interest rate hike in September, up from 63% last week, according to the CME FedWatch Tool.
This week is packed with U.S. economic data releases, including the June Consumer Price Index and Producer Price Index, retail sales figures, and weekly jobless claims.
Markets also await Kevin Warsh's debut appearance before Congress as Fed Chair on Tuesday and Wednesday for further clues on the economy, inflation and monetary policy goals.
Middle East clashes and higher oil prices weigh on bullion
U.S. and Iranian forces exchanged heavy missile and drone assaults, with Tehran striking U.S. facilities in states across the Gulf and hinting at the closure of the Strait of Hormuz. Oil prices jumped over 3% on the news.
"Renewed hostilities in the Gulf rekindle concerns about inflation and the risk of further Federal Reserve tightening, creating additional headwinds (for gold) through higher bond yields and a stronger dollar," Saxo Bank analyst Ole Hansen said.
