July 1 (Reuters) – Gold prices extended losses on Wednesday after falling to a seven-month low in the previous session, as fading prospects of a permanent U.S.-Iran peace deal heightened inflation concerns and bolstered expectations of Federal Reserve rate hikes.
FUNDAMENTALS
* Spot gold was down 0.6% at $3,981.69 per ounce, as of 0112 GMT, after hitting its lowest level since last November in the previous session. U.S. gold futures for August delivery lost 1.1% to $3,994.40.
* Dimming prospects for a near-term diplomatic breakthrough, Iran said it would not meet with senior U.S. envoys who travelled to the region following an outbreak of hostilities.
* Iranian officials added that both sides must still resolve ceasefire terms signed two weeks ago before addressing more complex issues on potential limits to its nuclear programme.
* Federal Reserve Bank of Cleveland President Beth Hammack said on Tuesday it remains possible that she’ll advocate for higher interest rates if inflation pressures fail to ease, underscoring a still-hawkish policy outlook.
* Traders are pricing in roughly a 67% chance of a rate hike in September, according to the CME FedWatch Tool, reflecting firming expectations of tighter monetary policy. [FEDWATCH/]
* Investors now await the June ADP employment data, due later in the day, and nonfarm payroll figures on Thursday for further clues on Fed’s rate path, which could shape near-term moves in bullion.
* Meanwhile, an OMFIF survey showed more central banks plan to cut dollar allocations over the coming decade as political risks associated with the U.S. currency rise.
* Spot silver fell 0.9% to $58.04 per ounce, platinum lost 0.9% to $1,537.78, and palladium inched 0.2% lower to $1,202.33.
DATA/EVENTS (GMT)
0800 EU S&P MFG Final PMI June
0900 EU HICP Flash YY June
0900 EU HICP-X F, E, A, T Flash YY, MM June
1345 US S&P Global Mfg PMI Final June
1400 US ISM Manufacturing PMI June
(Reporting by Pablo Sinha in Bengaluru; Editing by Sherry Jacob-Phillips)