Shafaq News
Gold prices slid more than 1% onMonday as fears of a closure of the Strait of Hormuz drove oil prices sharplyhigher, reviving expectations of elevated interest rates to combat inflationarypressures from escalating hostilities in the Middle East.
Spot gold dropped 1.5% to $4,060.36per ounce by 0541 GMT. U.S. gold futures for August delivery were down 1.1% at$4,068.30.
U.S. and Iranian forces haveexchanged heavy missile and drone assaults, with Tehran targeting U.S.facilities in states across the Gulf on Sunday and saying it had again closedthe vital Strait of Hormuz.
Oil prices jumped about 4%, thedollar and U.S. Treasury yields climbed, and share markets slipped in Asia.
"Any breakout of violence inthe Gulf is accompanied by pressure on gold," said Nicholas Frappell,global head of institutional markets at ABC Refinery.
"The question is, if theStrait of Hormuz remains effectively or partially closed, does that lead to adeflationary effect, further down the road, that might actually be supportivefor gold if you have demand destruction leading to lower economicactivity," Frappell added.
Kevin Warsh's first semiannualtestimony before Congress as Federal Reserve chair, along with a slate of keyU.S. economic data, including June CPI, PPI and retail sales, will be closelywatched this week for fresh clues on the economy, inflation and the monetarypolicy outlook.
Remarks from Fed policymakers,including Vice Chair Michelle Bowman and Governor Christopher Waller, laterin the day are also in focus as they could provide insights on how inflationarypressures are affecting the central bank's stance on interest rate hikes.
Traders are currently pricing in a72% chance of a U.S. Fed interest rate hike in September, up from about 63%last week, according to the CME FedWatch Tool. FEDWATCH/
COMEX gold speculators trimmed theirnet long positions by 1,964 contracts to 114,854 in the week to July 7, datareleased on Friday showed, following three consecutive weeks of increases.
Elsewhere, spot silver declined 2.6%to $58.29 per ounce, platinum shed 1.6% to $1,601.92, and palladium fell 2% to$1,251.42.
(REUTERS)
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