Gold retreats as oil rises and US interest rate concerns resurface

Gold prices fell during Wednesday’s trading session, after posting gains exceeding 2% in the previous session, amid rising oil prices and renewed inflation concerns, which heightened uncertainty about the trajectory of US interest rates and negatively impacted the precious metal.

Spot gold declined by 0.5% to $4,035.67 per ounce by 03:00 GMT, while US August gold futures fell by 0.7% to $4,042.20 per ounce.

Gold had surged more than 2% on Tuesday to reach $4,100.49 per ounce, recovering from its lowest level in two weeks, following data showing a slowdown in US consumer price inflation in June, driven by lower energy prices.

Meanwhile, oil prices rose for a third consecutive session after new US escalation against Iran, raising fears of renewed inflationary pressures that could prompt the Federal Reserve to keep interest rates higher for longer.

Kelvin Wong, a market analyst at OANDA, said markets had moved past the impact of inflation data and were now focusing on geopolitical developments that pushed oil prices higher, adding further pressure on gold.

Gold is typically viewed as a safe-haven asset and a hedge against inflation, but rising interest rates reduce its appeal since it yields no return.

In other precious metals, spot silver fell 0.3% to $58.48 per ounce, while platinum rose 0.2% to $1,635.56, and palladium increased by the same percentage to $1,307.11 per ounce.