Gold prices fall as US-Iran conflict escalates, triggering market bets on Fed rate hikes
Gold prices fell after the United States and Iran further escalated their attacks over the weekend, sparking market bets that the Federal Reserve may need to raise interest rates to curb inflation. Gold prices are currently hovering around $3,995 an ounce after falling more than 2% last week. Oil prices surged as tensions in the Middle East escalated, including an attack on a key oil facility in Kuwait and targeting ships trying to pass through the Strait of Hormuz. Tehran says the ceasefire agreement between the United States and Iran has been effectively scrapped, raising the possibility of worsening disruptions to critical energy shipments along the narrow waterway. The conflict in Iran, now five months old, is once again pushing up prices for energy and commodities ranging from fuel to raw materials needed for manufacturing and food production. This has heightened concerns that the Federal Reserve may eventually tighten monetary policy, even as weak U.S. economic data suggests a rate hike is unlikely in the near term. Rising borrowing costs adversely affect gold, which does not generate interest income. Cleveland Fed President Beth Hammack joined a growing number of Fed officials in a LinkedIn post on Friday. Expressing concern about inflation. Swaps traders have priced in at least one rate hike before the end of the year. Gold prices have been stuck in a tight range around $4,000 an ounce in recent weeks after falling 14% in the second quarter, its worst performance since 2013. Spot gold prices fell 0.7% to $3,991.00 an ounce. Silver prices fell 0.4% to $55.70 an ounce. Platinum and palladium prices also fell. The Bloomberg Dollar Spot Index, which measures the greenback, rose 0.1%. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed