Gold declines as fresh US-Iran tension fans inflation concerns

[SINGAPORE] Gold declined to near US$4,000 an ounce after the US and Iran traded attacks in the Persian Gulf, straining a ceasefire that had last week seen energy prices fall to pre-war levels and help temper expectations for an interest-rate hike.

Spot gold was trading as much as 0.9 per cent lower after rising 1.6 per cent on Jun 26. Oil advanced after a tanker carrying Qatari crude was hit during tit-for-tat assaults over the weekend that hampered shipping through the Strait of Hormuz.

The two sides have since agreed to halt the attacks and meet on Tuesday in Doha, Axios reported, citing unidentified US officials.

The latest developments in the Middle East come in the wake of US inflation data that, while high, was within analyst estimates. Treasury yields dipped after the US personal consumption expenditures price index, the Federal Reserve’s favoured inflation gauge, rose 0.4 per cent in May.

Gold is down about 23 per cent since the US and Israel launched strikes on Iran in late February, as higher energy prices fuelled inflation and raised expectations central banks would keep rates higher for longer, a negative for non-yielding bullion.

Spot gold was down 0.6 per cent at US$4,064.47 an ounce at 8.53 am Singapore time. Silver was 1.1 per cent lower at US$58.50. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index was marginally higher. BLOOMBERG