Gold Prices Are Falling Again: The Main Reasons
16 July 19:15
Gold prices are falling on Thursday, July 16. Ongoing tensions in the Middle East have heightened inflation concerns, increasing uncertainty surrounding the trajectory of interest rates in the U.S., according to "Komersant Ukrainian", citing Reuters.
The spot price of gold fell by 0.68% to $4,032.22 per troy ounce.
“Gold’s performance continues to be driven by inflation and geopolitics. Ongoing U.S. strikes against Iran and disruptions to oil supplies through the Strait of Hormuz are supporting oil prices and helping to maintain inflationary risks,” said Niko Tsabouras of Tradu.com.
On Wednesday, the United States carried out two rounds of strikes on Iranian coastal defense facilities and missile positions, having reimposed a naval blockade of Iranian ports the day before.
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In response, Tehran attacked U.S. military facilities in the Persian Gulf region. Federal Reserve Chair Kevin Warsh, testifying before Congress, declared his determination to bring down inflation but did not specify how. Meanwhile, data released on Tuesday showed that U.S. consumer inflation slowed in June, and immediately after the release, spot gold prices jumped by more than 2%. In addition, statistics released on Wednesday showed a decline in producer prices.
“Weak consumer and producer price indices make a tightening of the Fed’s monetary policy a non-urgent matter, and on this basis, the precious metal could ultimately resume its rally. The slowdown in inflation may be short-lived, as oil prices are rising again. A de-escalation or resumption of (peace) talks would be the best-case scenario for gold,” added Tsabouras.
Market participants are now awaiting comments scheduled for today from Dallas Fed President Lori Logan and Fed Vice Chair Philip Jefferson.
Palladium fell 1.56% to $1,293.64 per ounce, while silver dropped 1.81% to $56.73 per ounce. The price of platinum fell 0.72% to $1,662.15.
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