Gold is retreating, along with other precious metals, as the Middle East conflict remains deadlocked. The blockade of the Strait of Hormuz is keeping energy prices elevated and, in turn, maintaining pressure on the Federal Reserve to raise interest rates again.
The precious metal fell 3.04% this morning to $4,154.33 per ounce, slipping below the closely watched support threshold of $4,250. Silver, meanwhile, traded at $61 per ounce, a decline of 5.5%.
With the conflict between the United States and Iran entering its eighth month, there are no visible signs of progress toward a reopening of the Strait of Hormuz. On Saturday, Donald Trump rejected a plan proposed by Tehran to reopen the strait within seven days.
In broader asset markets, a dollar index is advancing in tandem with rising US Treasury yields. Precious metals, which bear no interest, are feeling the impact.
Gold is on course for a decline of nearly 6% for the month. The sell-off follows the Federal Reserve’s first interest rate increase since 2023, enacted to combat inflation driven by rising energy costs. Markets are currently pricing in approximately a 68% probability of another rate hike in October.
“Gold remains highly sensitive to oil prices and to constantly shifting expectations around a potential resolution in the Middle East,” said Justin Lin, analyst at Global X ETFs, speaking to Bloomberg. “At the same time, sellers are largely guided by real yields, which have continued to rise,” he added.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=547852
