Gold Prices Are Falling on Global Markets: The Main Reasons
15 July 16:42
Gold Retreats on Wednesday: Escalating Tensions in the Middle East Fuel Inflation Fears and Reinforce Expectations of Higher Interest Rates in the U.S., according to "Komersant Ukrainian", citing Reuters.
The spot price of gold fell 0.64% to $4,027.92 per troy ounce. The previous day, prices rose by more than 2%, reaching an intraday high of $4,100.19 per ounce, following the release of weak U.S. inflation data.
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Iran’s Islamic Revolutionary Guard Corps threatened to close other export corridors that benefit the U.S. and its allies, Iranian media reported after Iran closed the Strait of Hormuz, and the U.S. reimposed a naval blockade on Iranian ports. Against this backdrop, oil prices rose, having closed the previous session at a monthly high.
“Rising prices for oil, gasoline, and diesel in the United States will lead to an acceleration of inflation in the August report, which could support the hawkish rhetoric of some Fed officials, and that does not bode well for gold,” said UBS analyst Giovanni Staunovo. “In the near term, oil prices and gasoline prices in the U.S. will continue to influence gold, as they are one of the key drivers of inflation in the United States,” he added.
Fed Chair Kevin Warsh said at a hearing before the House Financial Services Committee on Tuesday that the central bank will not tolerate persistently high inflation, hinting that consumer price data did not provide much cause for optimism.
Traders are currently pricing in a roughly 59% probability of an interest rate hike in September, according to the CME’s FedWatch tool.
Investors are also awaiting the release of PPI data.
Palladium fell 1.11% to $1,290.39 per ounce, while silver dropped 1.04% to $58.02 per ounce.
Meanwhile, the price of platinum fell 0.73% to $1,619.87.
