(RTTNews) – Adding to two previous sessions of losses, gold prices have slumped on Monday after the U.S. and Iran suddenly renewed strikes against each other, ending a month-long hiatus, which rekindled concerns of a widespread war in the gulf. In addition, investors continued to analyze the prospects of a high-interest-rate regime in the U.S. in the near term.
Front Month Comex Gold for October month delivery has sharply declined by $45.20 (or 1.01%) to $4,449.50 per troy ounce.
Front Month Comex Silver for October month delivery has also tumbled by $0.832 (or 1.24%) to $66.420 per troy ounce.
The U.S.-Iran war is now in its seventh month with no apparent sign of let-up by both sides.
Last Monday, U.S. Treasury Secretary Scott Bessent announced a host of measures to cripple Iran’s economy and cut off all sources of fundings that provide a lifeline to Iran’s economy.
Bessent also warned that any nation that comes forward to support Iran would be dealt with in the same manner by the U.S.
The U.S. and Iran repeatedly made conflicting claims about the control and authority over the management of shipping traffic across the Strait of Hormuz.
Even though the economic sanctions intended to crush Iran’ s economy raised concerns of a delay in the Strait of Hormuz reopening, investors were largely relieved over the fact that the U.S. switched its strategy from military attacks to financial embargo against Iran.
However, after a month-long pause in U.S.-Iran attacks, yesterday, U.S. forces struck two Iranian rocket launchers located at Larak Island, a small island in the Strait of Hormuz, in order to block Iran from deploying sea mines.
Iran responded by striking at the King Hussein and Al-Azraq U.S. air bases in Jordan. The U.S. intercepted and destroyed the missiles. Iran also targeted Al Minhad Air Base in the United Arab Emirates.
Qatar, which has stepped up mediatory efforts to bring the U.S. and Iran back to the negotiating table, strongly condemned the attacks.
Through Truth Social, U.S. President Donald Trump posted two AI-generated videos depicting the bombing Iran’s vital oil hub, Kharg Island. Along with it, Trump posted a message that read that Kharg Island was blown to smithereens.
Though no reports of Kharg Island being struck have emerged so far, experts are of the view that Trump may be resorting to intimidation. U.S. Vice President JD Vance stated that Trump issued a message to Iranians.
Iran’s Deputy Foreign Minister Kazem Gharibabadi stressed again that Iran holds full control over the Strait of Hormuz and added that only ships coordinating with Iranian authorities will be allowed to pass through it.
On the monetary front, on Friday, U.S. Federal Reserve Chair Kevin Warsh delivered his keynote address at the Jackson Hole Symposium in Wyoming.
Observing that the labor market is stable and consumer spending is resilient, Warsh stressed that prices are climbing faster than the central bank’s expectations.
Remarking that the Fed should now focus on prices, Warsh stated that the Fed may have to intervene if inflation does not come down near 2%.
Warsh’s message is seen as a signal for a possible interest rate hike at the Fed’s next meeting.
According to the CME Group’s FedWatch Tool, investors are currently betting on a 65.90% chance of a 25-basis-point rate-hike at 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 34.10%.
Amid the renewed military attacks in the Middle East, crude oil prices surged today while the hawkish signals from the Fed Chair acted against gold prices.
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