Gold slides 2% on Thursday as Middle East tensions lifted oil, the dollar, and US Treasury yields, sending bullion to its lowest level in more than two weeks.
Spot gold fell about 1.9% to around $3,985 an ounce after dropping nearly 2% in intraday trade. It touched its weakest level since July 1. Meanwhile, US gold futures settled about 1.5% lower at roughly $3,992.
The move came as oil held near a one-month high. Concerns over supply grew after Iran reportedly asked Yemen’s Houthi movement to stand ready to close the Red Sea export route if the United States struck Iranian power infrastructure. As a result, traders linked higher oil prices to stronger inflation fears and firmer bets on higher US rates.
Gold Slides 2% on Rate Bets
That view added pressure to gold because bullion does not pay yield. The source article said traders now price in about a 53% chance of a September rate hike, based on the CME FedWatch Tool. However, that still points to an uncertain outcome rather than a settled call.
This week’s inflation data gave a mixed signal. US consumer price growth slowed in June, while producer prices fell the next day. Those readings would usually support a softer policy view, yet the market moved the other way.
Dollar and Yields Add Pressure
The dollar rose about 0.2%, which made gold more costly for buyers using other currencies. At the same time, the 10-year Treasury yield moved higher. Therefore, energy-driven inflation worries appeared to outweigh the softer official inflation data for now.
Kevin Warsh also added to the cautious tone this week. He said he was determined to bring inflation back down, although he did not signal how or when. The source article said that mix of firm energy prices, a stronger dollar, and higher yields kept investors leaning toward the dollar and away from zero-yielding gold.
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Source: InvestingLive
