Gold Tumbles Amid Fed Rate Hike Worries
(RTTNews) - Gold prices were sharply lower on Monday as oil prices jumped on renewed U.S.-Iran hostilities, rekindling worries about inflation and the outlook for interest rates.
Spot gold fell 1.2 percent to $4,073 an ounce while U.S. gold futures were down 0.8 percent at $4,080.90.
Oil prices jumped about 2 percent on concerns over potential supply disruptions after the U.S. launched fresh strikes against Iran.
The U.S. military launched another round of strikes against Iran overnight and into early Monday "to degrade their ability to attack commercial ships freely transiting the Strait of Hormuz."
These attacks came in response to an Iranian strike on a container ship in the critical waterway the day before.
Iran responded to these strikes by attacking Gulf Arab states, including Bahrain, Kuwait, Qatar, Jordan and Oman, further straining a fragile ceasefire between the two countries.
Iran announced the closure of the waterway "until further notice"- a claim U.S. military and maritime authorities rejected.
"A return to full-scale hostilities would have catastrophic consequences," United Nations Secretary-General Antonio Guterres said.
Apart from geopolitical tensions, investors looked forward to the release of key U.S. CPI and PPI data as well as Fed Chair Kevin Warsh's first congressional testimony this week for additional clues on the Fed's rate trajectory.
In the semi-annual Monetary Policy Report delivered to Congress on Friday, Fed officials noted that inflation remains elevated, but they don't think it will be lasting.
