Latest News

As tensions between the US and Iran fuel fears of rate hikes, gold is expected to lose value this week

Gold was down on Friday and set to lose a 'weekly loss' as concerns about the Federal Reserve tightening monetary policy were fueled by rising crude oil prices and tensions between Iran and the United States.

By 1106 GMT, spot gold had fallen 0.4% to $4105.97 an ounce, a decline of about 1.6% over the past week. U.S. Gold Futures for August Delivery fell 0.6% to $4114.80 an ounce.

Han Tan, Bybit's chief market analyst, said that spot prices "may again test $4,000 per ounce as a psychological support level should tensions escalate and oil prices extend their recovery."

The oil market is set to see a weekly gain after Iranian forces attacked U.S. military installations in Gulf States on Thursday. This was a day after Washington had targeted Iran's eastern and southern coasts.

Inflation can be boosted by higher energy prices, and this may lead central banks to increase interest rates. This tends to put pressure on gold, as the metal offers no return.

According to CME’s FedWatch tool, the markets are pricing in 58% of a rate hike for September.

Investors will be watching closely the U.S. inflation figures due next week, as well as Kevin Warsh's testimony.

Tan added that it is unlikely to see a change in the Fed's hawkish position without a sustained moderate of U.S. inflation.

The minutes of the Fed's meeting in June showed that inflation was a growing concern. Some policymakers were urging a rate increase before rates remained unchanged.

Gold prices in India fell this week due to price volatility, but demand in China was steady. The central bank of China reported its biggest monthly increase in gold reserves for more than 2-1/2 years.

Other metals include?spot-silver, which fell by 1.1% per ounce to $59.34, platinum, which gained 0.51%, and palladium, which climbed 1.6%, to $1.267.80. All three metals are on course for a loss this week. (Reporting and editing by Subhranshu sahu in Bengaluru, Leroy Leo, Subhranshu sahu)

(source: Reuters)