Gold declines as renewed US-Iran strikes fuel Fed rate-hike bets
Minutes of the Fed’s June meeting showed a few policymakers saw a case for raising rates
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GOLD declined after the US and Iran exchanged strikes over the weekend of Jul 11 and 12, sending energy prices higher and once more raising the prospects for interest-rate hikes to combat inflation.
Bullion fell as much as 1.2 per cent to below US$4,070 an ounce on Monday (Jul 13), having lost 1.4 per cent in the week ended Jul 12.
Confusion governed the status of energy transit via the Strait of Hormuz, with the US denying an earlier statement by Iran that the waterway would be closed “until further notice.” American forces started attacks to ensure freedom of navigation, according to US Central Command.
For gold traders, the escalation of fighting in the Middle East raises concerns that the US Federal Reserve may need to keep interest rates higher for longer to combat stubborn inflation. Minutes of the Fed’s June meeting released last week showed a few policymakers saw a case for raising rates, though they ultimately backed the decision to keep them steady.
More generally, the minutes reflected growing concern among US central bank officials over inflation just as worries over the labour market receded slightly. Higher borrowing costs are typically a headwind for gold, which does not pay interest.
The latest tensions arrive before Kevin Warsh makes his first appearance before the US Congress as Fed chairman on Jul 14. The House Financial Services Committee hearing in Washington will be preceded by June consumer price figures from the US Bureau of Labor Statistics.
Gold is down by more than a fifth since the Iran war started in late February, with a wave of profit-taking ending a three-year bull run and briefly pushing the metal below US$4,000 for the first time since November 2025. Hedge funds and money managers trimmed bullish bets on gold to 114,854 contracts for the week ended Jul 7, weekly CFTC data on futures and options showed on Jul 10.
Spot gold dropped 1.2 per cent to US$4,070.98 an ounce at 7.05 am in Singapore. Silver slumped 2.1 per cent to US$58.64 an ounce. Platinum and palladium also fell. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.2 per cent. BLOOMBERG
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