Gold slips 1% as oil rally brings Fed rate hikes into focus
GLD•Other precious metals also decline
Among other metals, spot silver XAG= slid 2.2% to $58.42 per ounce, platinum XPT= fell 1.7% to $1,617.58 and palladium XPD= dipped 2.1% to $1,264.24.
Gold falls as oil rally lifts rate-hike concerns
Gold retreated on Thursday, as the intensifying Middle East conflict drove up oil prices and supported investor concerns that inflationary pressures could push the U.S. Federal Reserve to raise interest rates later this year.
Spot gold XAU= dropped 1.2% to $4,079.50 per ounce by 1215 GMT, having hit its highest level since July 7 at $4,165.87 per ounce on Wednesday. U.S. gold futures GCcv1 for August delivery slid 1.7% to $4,082.80.
"Markets have shown they are not prepared to give up the $4,000 level without a fight," said Nikos Tzabouras, senior market analyst at Jefferies-owned Tradu.com.
Tzabouras added that geopolitical escalation, higher oil prices and the higher-for-longer rate outlook leave gold vulnerable to deeper declines toward $3,900 in the coming days.
"Even if policymakers leave rates unchanged (at next week's Fed meeting), as expected, the conflict in the Middle East continues to fuel inflation risks, supporting expectations for monetary tightening."
Traders are pricing in about a 80% chance of a Fed interest-rate hike in September, up from 68% on Wednesday, according to the CME FedWatch Tool. FEDWATCH
Middle East tensions keep oil and rate expectations in focus
The Iran-aligned Houthis said they struck two Saudi oil tankers as part of a naval blockade on Saudi Arabia, threatening to create a second chokepoint on global oil supplies. The U.S. military completed a 12th successive night of attacks on Iran, prompting further retaliation.
Oil prices rose for a fifth day. O/R
