(RTTNews) – Adding to yesterday’s slump, gold prices have moved lower on Tuesday following the extended delay in the reopening of the Strait of Hormuz. In addition, Saudi Arabia’s closure of its vital transport pipeline stoked inflationary concerns, and thereby increased the bets for a rate hike in the U.S.
Front Month Comex Gold for October delivery has edged lower by $16.70 (or 0.39%) to $4,301.30 per troy ounce.
Front Month Comex Silver for October delivery has also inched lower by $0.173 (or 0.27%) to $63.460 per troy ounce.
Aside from the U.S.-Iran crisis that is now in its seventh month, fresh concerns of oil and energy supply disruptions have emerged since last Friday after Saudi Arabia shut its vital East-West pipeline.
After facing a series of intense drone attacks by the Iran-linked Houthi militant group of Yemen, Saudi Arabia’s Ministry of Energy temporarily closed its 1,200 km long East-West Pipeline to commence repair works. The drones targeted the pipeline in the Medina and Riyadh regions.
Saudi Arabia neither disclosed the extent and severity of the damages nor the timeline for the completion of repair works. Experts are of the view that it could take several weeks.
This line served as an alternative for oil exports for Saudi Arabia to bypass the Strait of Hormuz and transport crude oil from the eastern Gulf coast to the port city of Yanbu on the Red Sea. The move has put nearly 4 million barrels per day of crude oil export at risk.
Experts caution that even if the damages are completely fixed, threat to oil transport via the Red Sea exists as Houthis are advancing across Yemen’s Red Sea coast.
The Iran-backed Houthis seized the islands of Greater and Lesser Hanish near the Bab el-Mandeb Strait, triggering concerns of an expansive oil supply crisis. Last week, the rebels captured the port of Mokha and Perim Island near the strait.
With regard to the Strait of Hormuz crisis, last Friday, driven by Oman, the member nations of the Gulf Cooperation Council agreed to discuss with Iranian leaders about the U.S.-Iran crisis and reopening of the strait inducing expectations for resumption of shipping traffic.
However, the planned meeting slated to be held in Oman on Monday was cancelled without any announcement on a future date.
Yesterday, U.S. President Donald Trump claimed through Truth Social that Iran wants to make a deal, quickly and badly. Trump added that the U.S. was open to dialogue and asserted that he will determine any such engagement.
Contradicting Trump’s claims, the secretary of Iran’s Supreme National Security Council Mohsen Rezaei announced that there would not be any talks with the the U.S. until Iran’s conditions are met. Rezaei also stated that damage-control measures cannot stop what is to come, reviving concerns of new attacks.
Yesterday, attributing the diesel price rise to the Russia-Ukraine war, Trump claimed that Russia and Ukraine agreed to stop attacking each other’s energy infrastructures. However, Ukraine’s President Volodymyr Zelenskyy remarked that Ukraine would halt its attacks only if Russia does the same.
With mounting crude oil supply concerns, inflationary pressures have spiked the bets on interest rate hike in the U.S.
Currently, investors are betting on a 92.50% chance of a 25-basis-point interest rate hike to be announced at the end of the two-day meeting of the U.S. Federal Reserve, which commenced today, while the odds on rates being held at the current level stand at 7.50%, according to the CME Group’s FedWatch Tool.
Gold price movements are inversely proportional to interest rate direction.
On the economic front, according to the Automatic Data Processing Research Institute, private employers in the U.S. added an average of 16,250 jobs per week in the four weeks ending August 29.
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