(RTTNews) – Gold prices hit a four-week low on Wednesday amid hawkish Federal Reserve expectations and escalating Middle East tensions.
Spot gold dipped half a percent to $4,309.07 an ounce while U.S. gold futures were down 0.9 percent at $4,356.79 an ounce.
Inflation worries returned to the fore as oil prices surged following fresh strikes between the U.S. and Iran.
Brent crude futures rose toward $95 a barrel as escalating fighting between the U.S. and Iran heightened concerns over further disruptions to energy flows through the Strait of Hormuz.
Tehran launched missile and drone attacks towards U.S.-linked sites in Bahrain, Jordan and Kuwait in defiance of a warning from U.S. President Trump that any retaliation would see Iran “hit much harder” and that the U.S. is still holding out on “the biggest attack of them all.”
The Iranian strikes came hours after the U.S. Central Command announced a fresh wave of attacks against IRGC targets, citing Tehran’s attempts to lay mines in the Strait of Hormuz and an earlier attack on a U.S. military base.
The dollar held firm amid indications that higher long-end Treasury yields are unlikely to retreat anytime soon.
Federal Reserve Governor Michael Barr said in a speech on Tuesday that he would back a rate hike if inflation doesn’t cool quickly.
According to the CME FedWatch tool, the chance of a quarter-point rate hike at the Fed’s September 15-16 meeting now stands at 68.2 percent.
With inflation still running above the Fed’s 2 percent target, Friday’s U.S. payrolls report along with the release of August CPI data on September 11 may offer additional clues on the Fed’s rate trajectory going forward.
Elsewhere, a 25-basis point ECB rate hike on September 10 looks almost certain.
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