Gold prices fell during trading on Wednesday, June 10, to trade near their lowest level in 11 weeks as the dollar and oil prices rose, amid renewed fighting in the region that exacerbated concerns about inflation and interest rate hikes.
In trading, gold futures fell by about 1.2% to $4,233.10 an ounce, while the spot price of the yellow metal also declined by 1.3% to $4,206.87 an ounce, after hitting its lowest level since March 23.
Conversely, the dollar strengthened, making gold, which is priced in dollars, more expensive for holders of other currencies. Oil prices rose 1%, fueling concerns about inflation and reinforcing expectations that interest rates will remain high for longer.
Ilya Spivak, head of global macroeconomics at TestLife, said in a note quoted by Reuters that the real driver is the shift in Fed policy expectations and rising yields and the dollar.
He added: I think all these factors are casting a shadow on gold.
The past few hours have witnessed an escalation of military tensions in the region, after the Jordanian Armed Forces announced that they had targeted and shot down five missiles launched from Iran towards the Azraq region.
In Bahrain, sirens sounded twice, amid calls from the Ministry of Interior for residents to head to the nearest safe place.
On Tuesday, the United States launched airstrikes against Iran after President Donald Trump said Tehran shot down a U.S. Apache helicopter in the Strait of Hormuz, deepening doubts about the prospects for a peace agreement and increasing tensions surrounding the fragile truce. Iran, in turn, targeted U.S. military bases in the region.
Markets are awaiting the release of US inflation data for last month later today, ahead of a meeting of the US Federal Reserve later this month.
