(RTTNews) – Gold prices were notably lower on Thursday as traders focused on inflation risks posed by higher energy prices and supply disruptions linked to the Iran war.
While softer-than-expected US inflation data eased concerns about Federal Reserve interest rate hikes in the near term, there are fears that higher energy prices as a result of rising geopolitical risks in the Middle East could keep interest rates higher.
Federal Reserve Bank of New York President John Williams said on Wednesday that inflation may have peaked and should come down, but it remains “undoubtedly very high.”
Federal Reserve Chairman Kevin Wacht told the House Financial Services Committee on Tuesday that central bank policymakers have no tolerance for high inflation, and the first objective is to get monetary policy right.
Fed funds futures currently point to the possibility of one to two rate hikes by the end of the year.
Spot gold fell 0.7 percent to $4,032.49 an ounce, while US gold futures were down 0.3 percent at $4,040.47.
The US dollar was broadly lower while US Treasury yields edged higher ahead of key retail sales and jobless claims data due later in the session.
Brent crude futures were trading below $85 a barrel but remained near a one-month high as investors watched rising tensions in the Middle East.
After the United States launched a new wave of attacks on several locations in Iran on Wednesday night, Iran retaliated by launching new attacks on US military bases in neighboring Gulf states, raising concerns over global shipping.
Amid the ongoing conflict around Iran, missile attacks and diplomatic efforts, US President Donald Trump said that Tehran “will be defeated very soon”.
Media reports suggest Trump is leaning toward further expanding U.S. military operations in Iran, including sending ground troops and the possible capture of Kharg Island, Iran’s primary oil export terminal.
Iran said it had no plans for talks and was focused on its defence. Iran’s top negotiator, Mohammad Bagher Ghalibaf, has declared that the county’s armed forces have “complete freedom of action” against “enemy aggression”.
Ghalibaf said Iran is waging an “existential war” against the United States because Washington is pursuing objectives that go beyond replacing Iran’s government.
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