Gold fell Thursday as elevated oil prices fueled fears of inflation and prolonged high interest rates, and U.S.-Iran peace talks stalled further.<\/p>\n
Arko Datta | Reuters<\/p>\n
Gold\u00a0fell on Thursday as elevated oil prices fuelled fears of inflation and prolonged high interest rates, while investors looked for clarity on the stalled U.S.-Iran peace talks.<\/p>\n
Spot\u00a0gold<\/a>\u00a0was down 0.7% at $4,705.37 per ounce, as of 0432 GMT. U.S.\u00a0gold\u00a0futures<\/a>\u00a0for June delivery fell 0.7% to $4,720.90.<\/p>\n Brent crude oil prices remained above $100 a barrel after larger-than-expected gasoline and distillate stock draws in the United States, and over a lack of progress on the peace talks.<\/p>\n “The sight of Brent oil back at triple digits is keeping inflation worries at the forefront, and is putting\u00a0gold\u00a0on the back foot today,” said Tim Waterer, chief market analyst at KCM Trade.<\/p>\n Higher crude oil prices can stoke inflation by raising transportation and production costs, increasing the likelihood of higher interest rates.<\/p>\n While\u00a0gold\u00a0is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing on bullion’s appeal.<\/p>\n Iran\u00a0seized\u00a0two ships in the Strait of Hormuz on Wednesday, tightening its grip on the strategic waterway after U.S. President Donald Trump\u00a0called off\u00a0attacks with no sign of the peace talks restarting.<\/p>\n Trump maintained the U.S. Navy blockade of Iran’s trade by sea, and Iran’s \u200bparliament speaker and \u200btop negotiator Mohammad Baqer Qalibaf said a full ceasefire only made sense if it was lifted.<\/p>\n “Investors are worried that this ‘ceasefire-plus-blockade’ status quo could drag on for months, turning a short-term spike into a long-term inflationary anchor, which would hurt\u00a0gold\u00a0from a yield perspective,” said Waterer.<\/p>\n Meanwhile, a Reuters\u00a0poll\u00a0of economists showed the U.S. Federal Reserve<\/a> will likely wait at least six months before cutting interest rates this year as war-driven energy shocks reignite already-elevated inflation.<\/p>\n Traders now see a 26% chance of a 25-basis-point Fed rate cut in December. Before the war, there were expectations of two reductions for this year.\u00a0<\/p>\n Spot silver<\/a>\u00a0fell 2% to $76.17 per ounce, platinum<\/a>\u00a0lost 1.8% to $2,037, and palladium<\/a>\u00a0was down 1.2% at $1,526.50.<\/p>\n