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Gold slips below $4,000 as energy inflation fears revive rate-hike bets
Gold faces downside pressure as the dollar and US Treasury yields rebound, while West Texas Intermediate sits near $80 after renewed Middle East risks.
Gold edged lower on Thursday, trading below the $4,000 level as investors weighed renewed Middle East tensions and the risk that higher energy prices could re-ignite inflation concerns that keep Federal Reserve rate-hike expectations in play.
FXStreet said June CPI and PPI both came in below market expectations, but the softer data only pushed back near-term Fed hike timing rather than changing the outlook that borrowing costs could rise later this year if inflation remains persistent. The article also pointed to a rebound in the US dollar and US Treasury yields after two straight sessions of losses, which further weighed on non-yielding gold.
The piece also cited an economic backdrop that included US retail sales rising 0.2% month over month in June, and initial jobless claims falling to 208K from 216K, both in line with or better than expectations. With interest-bearing assets offering more competitive returns, gold’s appeal remained limited.
Geopolitical developments added to the mix, with the US carrying out a fifth consecutive night of strikes on Iranian targets and Iran responding by targeting US assets in Kuwait, Bahrain, and Jordan. Oil extended its gains on the Reuters-referenced reporting, lifting WTI to around $80, and the technical picture for XAU/USD stayed bearish, with sellers looking for a sustained break below $4,000.
Latest closeGold $4,133.60 ▲2.5%|WTI crude $75.32 ▼6.2%