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Gold slips as renewed US-Iran tensions lift oil and boost Fed hike bets

XAU/USD was around $4,011, down 2.6% on the day, as WTI rose to about $74.50 and traders turned to Tuesday’s US CPI for new inflation cues.

Reported · Written up by our desk · Major Pairs

Gold prices fell at the start of the week, with renewed US-Iran hostilities supporting crude and reviving concerns about sticky inflation, a mix that is reinforcing expectations for a Federal Reserve interest rate hike later this year, according to FXStreet.

At the time of writing, XAU/USD traded near $4,011, down 2.6% on the day and at its lowest level since July 1. The US and Iran exchanged missile and drone attacks over the weekend, with Washington striking southern Iran and Tehran targeting US military facilities across the Gulf.

Crude prices and the US dollar moved higher, adding headwinds for the non-yielding metal. WTI was around $74.50, up more than 4% on the day, and the US Dollar Index was near 101.14 after briefly dipping below 101.00 earlier.

FXStreet also cited Brown Brothers Harriman commentary that stabilizing US labor market conditions and sticky inflation could keep fed funds rate expectations “hawkish.” The firm said markets have already priced in a 25-basis-point hike by year-end and nearly 50 bps of additional tightening over the next 12 months, with traders now focused on Tuesday’s US CPI data and Fed Chair Kevin Warsh’s congressional testimony for further guidance.

Latest closeGold $4,128.90 ▼0.0%|WTI crude $71.51 ▼0.8%|Dollar index 100.97 ▲0.0%

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