Gold prices fall amid escalating Middle East tensions

Gold prices fell on Thursday amid escalating tensions in the Middle East, which heightened inflation concerns and created uncertainty regarding the trajectory of US interest rates. Spot gold declined 0.7% to $4,032.19 per ounce, while US August gold futures dropped 0.4% to $4,037.20, according to Reuters.

Rising energy prices are fueling inflation fears, thereby boosting expectations of interest rate hikes and reducing demand for gold as a yield-free safe haven. Data from CME Group’s FedWatch Tool showed that traders are pricing in a 51% probability that the Federal Reserve (the US central bank) will raise interest rates in September.

Federal Reserve Chair Kevin Warsh reaffirmed his commitment to curbing inflation, though he did not specify how he intended to achieve this. Data released on Tuesday showed that US consumer price inflation slowed in June, prompting spot gold prices to jump more than 2% immediately following the report. Additionally, data released on Wednesday indicated a decline in the Producer Price Index.

In other precious metals, spot silver fell 1.7% to $56.82 per ounce, platinum dropped 1.2% to $1,654.38, and palladium declined 1.5% to $1,294.43.