Gold Dips Below $4500 On Rate Hike Worries
(RTTNews) - Gold prices traded lower on Wednesday, extending losses from the previous session as investors fretted about oil-driven inflation and the potential impact on interest rates.
Spot gold dipped 0.4 percent to $4,490.29 an ounce amid renewed U.S.-Iran tensions near the Strait of Hormuz. U.S. gold futures for August delivery were down 0.3 percent at $4,522.70.
Iran has accused the United States of breaching their ceasefire and warned it was ready to retaliate after U.S. forces hit Iranian missile sites and boats.
U.S. Secretary of State Marco Rubio said any potential peace deal could still take several days to complete.
It seems there are unresolved issues surrounding Tehran's frozen assets and unrestricted passage through Hormuz.
Iran's Islamic Revolutionary Guard Corps (IRGS) said that it targeted an F-35 fighter jet and several drones after identifying "hostile aircraft" entering Iranian airspace.
It is feared that further military escalation could prompt Iran to retaliate against neighboring states.
In a written statement carried by state television, Iran's Supreme Leader Mojtaba Khamenei said regional countries would no longer be shields for U.S. bases.
The dollar index was firm ahead of Thursday's U.S. PCE data, expected to show another month of elevated price pressures.
Earlier in the day, Bank of Japan Governor Kazuo Ueda has warned that central banks should not assess oil price movements in isolation.
Minneapolis Fed President Neel Kashkari has warned that inflation risks are rising but it's too soon to predict a rate hike.
According to CME Group's FedWatch tool, investors currently price in a 37 percent chance of a 25 basis-point rate hike from the Federal Reserve in December.
Elsewhere, ECB policymaker and Bank of France Governor Villeroy de Galhau said in an interview to the broadcaster CNBC on Tuesday that the European Central Bank "will do what is necessary" to bring inflation back to the 2 percent target.
ECB Executive Board member Isabel Schnabel said the central bank should raise interest rates in June even there's a quick resolution to the Middle East conflict.
