(RTTNews) – Gold prices have edged higher on Monday, adding to the three previous sessions of gains, as crude oil tumbles as the U.S. readies for a crushing economic blockade on Iran. Reports also indicated the U.S. Treasury could use General Account funds to buy back long-term bonds, which triggered concerns of the U.S. dollar weakening.
Front Month Comex Gold for September month delivery has inched higher by $13.20 (or 0.29%) to 4,641.50.
Front Month Comex Silver for September month delivery has slid by $1.045 (or 1.50%) to $68.485 per troy ounce.
Crude oil and energy supply disruption concerns have risen since last week when U.S. President Donald Trump announced through Truth Social his plans to crush Iran economically at a level not seen before for failing to utilize the opportunity to strike a deal with the U.S.
Trump also warned that any country attempting to offer any form of lifeline to Iran will suffer similar consequences.
Iran vowed to retaliate against any country that cooperates with the U.S. plans to exert maximum financial pressure on Iran.
Today, without giving much detail, Trump posted through Truth Social that Iran is completely collapsing.
With the U.S.-Iran war not showing any sign of easing as both nations have hardened their stances, especially on control over the critical Strait of Hormuz seaway in the Persian Gulf, crude oil and energy-related inflationary effects continued to concern investors.
In an Op-Ed for the Financial Times, U.S. Treasury Secretary Scott Bessent claimed that the U.S.-Israel war with Iran is entering its endgame and threatened Iran with the single greatest financial offensive ever.
As Bessent is set to announce the details, investors held back from big moves as they also factored in the chances of a large-scale supply disruption on crude oil and energy.
The Secretary of Iran’s Supreme National Security Council Mohsen Rezaei counter-threatened through social media that Iran would not allow any oil exports from anywhere in the Persian Gulf if the economic blockade sets in.
Last Wednesday, the U.S. Treasury stated on record that the U.S. national debt crossed $40 trillion.
After the 10-year and 30-year U.S. government bond yields hit nearly 20-year highs last week, the U.S. Treasury Department surprised investors on August 19 by announcing plans to double the amount of buybacks of longer-dated Treasury Bonds from investors from $2 billion to $4 billion per operation between September 9 and November 4.
Though the long-dated Treasury yields plummeted on the day of announcement, they were up again last Friday.
Today, citing two official sources, CNBC reported that the Treasury could utilize nearly $1 trillion from the General Account to fund the bond buybacks.
According to the U.S. Federal Reserve, the General Account, which is deposited at the Fed, held $953.6 billion as of August 19.
On the economic front, the Chicago Fed National Activity Index released by the Federal Reserve Bank of Chicago today revealed that the index edged down to 0.08 in July from 0.06 in June indicating a mild weakness in the U.S. economic activity.
With no other significant data releases scheduled, market participants are awaiting July’s Personal Consumption Expenditure Price Index which is slated to be released on Wednesday.
The attention of economists is also fixed on the the upcoming annual Jackson Hole conference that takes place from August 27 to 29 in Wyoming.
U.S. Federal Reserve Chair Kevin Warsh will deliver his much-awaited keynote address on August 28, when from investors will seek to derive clues on how the central bank is assessing the economy against the backdrop of recent geopolitical events.
The Fed decided to hold interest rates unchanged in its July meeting.
The U.S. dollar index was last seen trading at 98.99, up by 0.19 (or 0.19%) today.
According to the CME Group’s FedWatch Tool, investors are currently betting on a 42.10% chance of a 25-basis-point interest rate-hike at the Fed’s upcoming meeting on September 15-16, while the odds on rates being held at the current level stand at 57.90%.
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