(RTTNews) – Extending the losses from the four previous sessions, gold prices have tumbled on Tuesday as expectations of a near-term high-interest-rate regime gain strength, which pushed the U.S. dollar to the upside even though crude oil prices declined sharply due to resumption of shipping traffic across the Strait of Hormuz.
Front Month Comex Gold for August month delivery has slumped by $47.90 (or 1.14%) to $4,154.80 per troy ounce.
Front Month Comex Silver for August month delivery has nosedived by $3.589 (or 5.45%) to $62.245 per troy ounce.
Last week, the U.S. Federal Reserve announced maintaining interest rates at the current level of 3.50% to 3.75%, in line with expectations. In his address following the announcement, new Fed Chair Kevin Warsh sounded hawkish and termed the persistent high prices a burden for households.
Assessing from the Fed’s Dot Plot, investors gathered that nearly half of the monetary policy officials expected at least one rate increase before this year end. While nine projected at least one hike soon, six suggested multiple hikes.
Economists have drawn attention to the fact that many of the hawkish projections came from non-voting officials. However, investors have started pricing in rate hikes at the Fed’s next meeting.
With rate-cut expectations currently off the table, investors are looking for the upcoming personal consumption expenditures price index for further indications on the Fed’s trajectory.
According to CME Group’s FedWatch Tool, investors are betting on a 34.20% chance of a quarter-basis-point interest rate hike at the upcoming Fed’s meeting on July 28-29.
The U.S. dollar index was last seen trading at 101.40, up by 0.39 points (or 0.39%) today.
On the geopolitical front, following last Wednesday’s signing of a Memorandum of Understanding between U.S. President Donald Trump and Iran’s President Masoud Pezeshkian, Iran reopened the Strait of Hormuz that it had closed after the breakout of war.
On its part, the U.S. announced lifting the naval blockade it imposed on ships entering or exiting Iranian ports.
Since then, momentum returned across the Strait of Hormuz with ships carrying oil beginning to move out of the gulf region to their respective destinations.
Both sides discussed over the weekend in Switzerland, but the talks were briefly disrupted after representatives of Iran walked out in protest against Trump’s remarks on Iran.
Condemning Israeli strikes on Lebanon, Iran’s Islamic Revolutionary Guards Corps announced shutting the Strait of Hormuz once again though the U.S. military refuted the claim and stated that commercial ships are passing the channel freely.
Angered by this, Trump remarked that if Iran attempts to do so, it may not exist as a nation.
U.S. Vice President JD Vance, who headed the U.S. negotiators, took a reconciliatory stance and announced that Trump wants the U.S. to turn a new leaf with Iran.
Today, Trump messaged via Truth Social that 19 million barrels of oil flowed out of the Hormuz Strait on Monday and stated that the funds released by the U.S. to Iran will be used for purchase of food and medical supplies from the U.S.
Iran’s IRNA news quoted Deputy Foreign Minister Kazem Gharibabadi who led Iran’s technical negotiating team, as stating that the technical talks concluded with an agreement on arrangements for future negotiations.
Iran’s Parliamentary Speaker Mohammad Bagher Ghalibaf claimed that the strait will never return to pre-war status. The distant possibility of a toll collection when the final deal is signed continues to concern fleet owners.
Maritime data and analytics company Kpler stated that 71 ships travelled through the strait between Friday and Sunday. Prior to the outbreak of war, around 100 to 130 vessels passed through the strait.
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