Gold hits over 3-week low as MidEast tensions fan rate-hike fears
Gold fell on Wednesday to its lowest in more than three weeks, as the escalating Middle East conflict lifted oil prices and stoked inflation and rate-hike fears, while investors focused on upcoming U.S. jobs data.
Spot gold was down 0.6% at $4,304.01 per ounce by 0017 GMT, its lowest since August 7. Prices were headed for a fourth straight session of losses and remained below the 200-day moving average, a closely watched technical level.
U.S. gold futures for December delivery fell 1% to $4,350.80.
The U.S. dollar held firm, making greenback-priced metals costlier for buyers using other currencies. [USD/]
The U.S. launched a barrage of airstrikes against Iran on Tuesday, prompting Iranian retaliation, in the most serious escalation in weeks. Oil prices rose for a third straight session, while U.S. Treasury yields advanced. [O/R] [US/]
"A rebound in oil prices after renewed U.S.-Iran tensions added to inflation concerns. A pricier crude could continue to tighten monetary policy expectations and drive yields higher, limiting any rebound potential for gold," said Bas Kooijman, CEO and asset manager of DHF Capital S.A.
Although gold is seen as an inflation hedge, higher interest rates weigh on its appeal as it offers no yield.
Traders are pricing in a 67% chance of a rate hike at the Federal Reserve's policy meeting this month, according to the CME FedWatch Tool.
Fed Governor Michael Barr said if inflation does not cool quickly, it will be time for the central bank to raise rates. Last week, Fed Chairman nodded to the prospect of a rate hike.
The ADP employment report is due later in the day and the more crucial nonfarm payrolls data is due on Friday.
"Softer figures could ease the pressure on gold, while stronger data or more hawkish Fed comments may extend the decline," Kooijman said.
Among other metals, spot silver lost 1% to $63.60 per ounce, platinum edged 1% lower to $1,722.23 and palladium fell 1.4% to $1,292.21.
