(RTTNews) - Gold prices traded lower on Wednesday as renewed Middle East tensions continued to push oil prices higher, clouding the outlook for inflation and interest rates.
Spot gold fell 0.9 percent to $4,448.70 an ounce, while U.S. gold futures for August delivery were down 1 percent at $4,476.40.
Inflation concerns returned to the fore as Brent crude prices jumped nearly 3 percent toward $99 a barrel following reports that the U.S. military had thwarted Iranian missile attacks targeting Bahrain, Kuwait, and other locations in the region.
There is considerable uncertainty over U.S.-Iran negotiations aimed at ending the war and reopening the Strait of Hormuz, a critical waterway for the energy market globally.
U.S. Secretary of State Marco Rubio said that Iran has mined "large segments" of the Strait of Hormuz and peace talks could take several months to conclude.
Rubio also told the Senate Foreign Relations Committee that Iran's supreme leader Mojtaba Khamenei is alive and increasingly active at some level.
Mixed signals from peace talks kept geopolitical uncertainty elevated. Iranian media had reported that talks with the U.S. were halted amid continued fighting in Lebanon.
It was said that Tehran was taking 'stern' approach in negotiations and hasn't been in contact with Washington for days.
A senior Iranian military officer said that a resumption of hostilities with the United States was inevitable.
However, U.S. President Donald Trump said reports of stalled talks were "fake news" and that the two sides have been "continuously" having conversations.
It was reported that U.S. forces defeated multiple ballistic missiles and drones on Tuesday, and conducted self-defense strikes on Qeshm Island in response to attempted attacks by Iran across the Middle East.
The OECD has sharply cut its global growth outlook and warned that a prolonged U.S.-Iran conflict could push global growth close to recession levels.
In economic releases, the ADP employment report for May, final durable gods and factory orders data for April, and the release of Fed's Beige Book survey results will be in the spotlight later today ahead of the all-important May employment report due on Friday.
Economists estimate a gain of 85,000 jobs last month, while the jobless rate is seen holding steady at 4.3 percent.
On Tuesday, Cleveland Fed President Beth Hammack said persistent inflation may require an interest rate hike.
In a speech prepared for the University of Derby business school on Tuesday, Bank of England policymaker Megan Greene stated that earlier action might be required to contain the risk of broader price increases across the economy.
Markets now see an ECB rate hike next week after Eurozone inflation rose to the highest since 2023 in May, driven by energy and services.
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