(RTTNews) – After two consecutive days of gains, gold prices have tumbled on Friday as crude oil prices soared with no end in sight to the U.S.-Iran conflict, leading to expectations of a high interest rate regime in the U.S. in the upcoming months. In addition, traders opted to book profits from the surge in gold prices from the two previous sessions.
Front Month Comex Gold for August month delivery has slumped by $52.10 (or 1.27%) to $4,048.00 per troy ounce.
Front Month Comex Silver for August month delivery has also plummeted by $1.350 (or 2.30%) to $57.465 per troy ounce.
On Wednesday, the U.S. Federal Reserve held interest rates in the current range of 3.50% to 3.75% after the Federal Open Market Committee voted (9 in favor and 3 against) to maintain the target interest rate at the current level. The decision was largely in lines with analysts’ forecasts.
Since all three dissenters, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan called for a “25-basis point hike” expectations of a possible hike in September are gradually increasing.
Commenting on the dissent as a “good family fight,” U.S. Federal Reserve Chair Kevin Warsh insisted that the Fed has only a single inflation target of 2% with no other soft or implicit target.
Warsh vowed to act to contain inflation in the 2% range and refrained from offering any forward guidance.
The bets for elevated U.S. interest rates have increased following a surge in crude oil prices due to rising oil-linked inflationary concerns.
In the Middle East, the Palestinian Hamas group agreed to a draft peace deal on Gaza aimed at fully ending Israel’s war on Gaza.
Late Thursday, U.S. President Donald Trump announced the agreement, which includes complete disarmament of Hamas and other armed groups in Gaza.
The agreement was finalized through mediators from Egypt, Qatar, and Turkey with the U.S. coordinating the efforts.
Israeli forces will withdraw when the surrendering of arms by the militant groups is completed.
However, on the U.S.-Iran conflict, the standoff between both nations continues.
The brief truce that lasted for four days since last weekend came to an abrupt end after attempts by Iran to target U.S. bases in Jordan.
Compelled to retaliate, U.S. forces completed a heavy wave of strikes across multiple targets in Iran.
Today, Kuwait announced intercepting and destroying Iranian drones.
Claiming that the Strait of Hormuz belongs to Iran, Iran’s Islamic Revolutionary Guards Corps announced that it struck and stopped two tankers transiting the strait. However, U.S. Central Command rejected the claims.
The Strait of Hormuz continues to remain largely closed amid the U.S.-Iran tensions.
Following the threats to marine traffic in the Red Sea from Yemen’s Houthi militant group, Saudi Arabia is building an international coalition to secure shipping routes in the Bab el-Mandeb Strait, the Red Sea, and the Gulf of Aden. Reportedly, 14 nations have affirmed their support.
The U.S. dollar index was last seen trading at 100.04, down by 0.03 (or 0.03%) today. Hovering around the 100-levels, the index staged a modest recovery.
Currently, investors are betting on a 64.80% chance of a 25-basis-point interest rate hike in the upcoming meeting of the U.S. Federal Reserve on September 15-16, while the odds on rates being held at the current level stand at 35.20%, according to the CME Group’s FedWatch Tool.
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