Gold falls 2% as Middle East tensions fuel inflation fears, rate-hike bets
GLD•Other precious metals also decline
Among other metals, spot silver XAG= slid 3.6% to $57.53 per ounce, platinum XPT= fell 3.1% to $1,593.22, and palladium XPD= dipped 2.3% to $1,261.00.
Gold retreats on higher oil prices and rate-hike expectations
July 23 (Reuters) - Gold fell more than 2% on Thursday, retreating from the previous session’s two-week high, as the Middle East conflict drove up energy prices, fuelling inflation concerns and reinforcing expectations of U.S. interest-rate hikes.
Spot gold XAU= was down 2% at $4,047.26 per ounce by 11:51 a.m. EDT (1551 GMT), having hit its highest level since July 7 on Wednesday.
U.S. gold futures GCcv1 for August delivery slid 2.5% to $4,050.
The U.S. dollar gained 0.3%, making greenback-priced bullion expensive for buyers overseas, while yields on the 10-year U.S. Treasury note US10YT=RR rose to a more than one-year high.
"The higher crude oil prices are pushing up bond yields on the notions that central banks will not be able to lower their interest rates because of problematic inflation, and rising bond yields are the enemy of gold and silver market bulls because gold and silver carry no yield," said Jim Wyckoff, a market analyst at American Gold Exchange.
Oil surge and Fed meeting keep traders focused on policy cues
Brent crude oil prices hit $100 a barrel for the first time since late May after Yemen's Houthis said they struck two Saudi oil tankers, raising fears that disruption to global oil supplies could spread beyond the Strait of Hormuz. O/R
Elevated oil prices have been weighing on gold prices as they raised expectations of higher-for-longer interest rates, which tend to diminish the appeal of non-yielding gold.
Investors now await the U.S. Federal Reserve's interest rate decision and Chair Kevin Warsh's comments following the central bank's two-day policy meeting next week.
