Gold prices edged lower on Wednesday as rising oil prices and renewed tensions in the Middle East heightened concerns over inflation and potential interest rate hikes, while investors awaited key US labour market data for further direction.
Spot gold fell 0.3% to US$4,471.38 an ounce after gaining more than 1% in the previous session, while US gold futures for August delivery slipped 0.5% to US$4,499.30.
According to market analysts, concerns are growing that the fragile ceasefire involving Iran may not hold, particularly after fresh hostilities emerged across the Gulf region. The US military said Iranian missile attacks targeting Bahrain, Kuwait and other regional locations were either intercepted or failed, while diplomatic efforts between Washington and Tehran showed little sign of progress.
Analysts noted that further escalation in the conflict could undermine gold’s recent recovery, even though the precious metal traditionally benefits from safe-haven demand during periods of geopolitical uncertainty.
At the same time, oil prices climbed more than 1%, fuelling worries that higher energy costs could reignite inflationary pressures. This has shifted investor attention towards the possibility of tighter monetary policy in the United States.
Cleveland Federal Reserve President Beth Hammack warned that the US central bank may need to raise interest rates if inflation continues to accelerate. Higher interest rates typically reduce the appeal of non-yielding assets such as gold.
Investors are now closely watching US non-farm payroll figures and upcoming employment data later this week for clues on the Federal Reserve’s next policy move.
Among other precious metals, silver fell 0.4% to US$74.82 an ounce, platinum declined 0.5% to US$1,927.25, while palladium was little changed at US$1,369.64.
