(RTTNews) – Extending last Friday’s losses, gold prices have plunged on Monday amid fresh weekend escalation in the U.S.-Iran conflict, with Iran closing the Strait of Hormuz and driving crude oil prices higher. The consequent inflationary threats have rekindled concerns of a rate hike by the U.S. Federal Reserve.
Front Month Comex Gold for August month delivery has plummeted by $105.60 (or 2.57%) to $4,008.10 per troy ounce.
Front Month Comex Silver for August month delivery has also plunged by $2.055 (or 3.43%) to $57.895 per troy ounce.
A weekend flare-up in the Middle East between the U.S. and Iran impacted gold prices today.
Iran’s Islamic Revolutionary Guards Corps fired on a Cyprus-registered container passing through the Strait of Hormuz.
According to the U.K. Maritime Trade Operations, the vessel caught fire, compelling the crew to abandon it and escape through lifeboats. Reportedly, one crew member is missing.
Iran claimed that the vessel was navigating through what it called an “unauthorized route”.
In response to Iran’s attack, U.S. forces hit back on Iran. U.S. Central Command stated that it hit nearly 140 Iranian targets.
In retaliation, Iran struck Jordan, Qatar, the United Arab Emirates, and Bahrain with a barrage of missiles and drones targeting U.S. bases.
In addition, claiming full control, Iran closed the Strait of Hormuz, which it had earlier opened after the June 17 Memorandum of Understanding it signed with the U.S.
In an interview with “Fox + Friends” of Fox News, U.S. President Donald Trump stated that the U.S. would likely take over the control of the Strait of Hormuz and may demand reimbursement for controlling the strategic waterway. Trump asserted his intention to make the U.S. a guardian of the strait.
Trump reaffirmed that the Strait of Hormuz is open to commercial traffic. U.S. Central Command confirmed Trump’s message and announced that U.S. forces are ready to ensure freedom of navigation for all vessels.
The contradictory claims over the authority on the management of Strait of Hormuz as well as the fear of coming under fresh attacks, resulted in a sudden decline in shipping traffic across the critical seaway.
Maritime intelligence firm Kpler reported only 14 crossings across the strait on Sunday, the lowest in a month.
However, the agency admitted that more vessels could have travelled through “dark routes”, whereby sailors switch off their visibility to prevent the vessels from being seen or targeted.
Over July 10 to 12, confirmed crossings declined by nearly 52%, week on week.
On June 17, both the U.S. and Iran agreed to halt their attacks for a 60-day period, until August 21, and discuss measures to resolve disputes only through negotiations.
After Iran reopened the Strait of Hormuz, which it had shut when the war erupted on February 28, shipping traffic picked up and crude oil prices started to decline as supply-related concerns began to diminish.
However, after this weekend conflict, concerns over oil supply disruption have returned to the forefront and crude oil prices skyrocketed by more than 5%.
As the ceasefire is now in question, investors are foreseeing a high-interest regime as inflationary threat emerges strongly.
It was an unremarkable day on the economic front for the U.S. today with no significant data releases.
The U.S. dollar index was last seen trading at 101.24, up by 0.29 (or 0.29%) today.
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