Gold prices fell on Monday and remained on track for a fourth consecutive monthly decline as rising oil prices following fresh US-Iran military strikes strengthened expectations of further US Federal Reserve interest rate hikes.
Spot gold slipped 0.8% to US$4,057.77 an ounce, while US gold futures for August delivery eased 0.6% to US$4,072.20. The precious metal is set to post a monthly loss of 10.5%.
The decline came after oil prices climbed following Iran’s missile and drone attacks on US military sites in Kuwait and Bahrain over the weekend, although reports later indicated Tehran and Washington had agreed to halt hostilities and resume talks over the Strait of Hormuz dispute.
Tim Waterer, chief market analyst at KCM Trade, said renewed military action had raised doubts over how long oil prices could remain subdued, adding that higher crude prices could worsen inflation and reinforce expectations for tighter monetary policy.
Markets are now pricing in three US interest rate hikes this year, including around an 80% probability of another increase in December, according to the CME FedWatch Tool. Investors are also awaiting US ADP employment data and non-farm payrolls later this week for further clues on the Federal Reserve’s policy direction.
Separately, RHB Investment Bank Bhd maintained its negative trading bias on COMEX gold despite the recent rebound above the key US$4,000 support level. The research house said a break below that support could trigger a deeper correction towards US$3,700, while resistance is seen at US$4,400 and US$4,650.
RHB advised traders to maintain short positions initiated at US$4,605.70, noting that the commodity remains in a broader bearish setup despite forming a temporary base above the US$4,000 level.
