Gold prices fell during trading on Thursday, May 28, as new US attacks on Iran pushed oil prices higher, raising concerns about increased inflation and casting a shadow over interest rate expectations.
In trading, the spot price of gold fell by about 1.5% to $4,389.56 an ounce, after having earlier fallen to its lowest level since March 26. The price of futures contracts for the yellow metal also fell by 1.5% to $4,382.50 an ounce.
Meanwhile, the dollar rose to its highest level in a week, increasing the cost of gold, which is priced in US dollars, for holders of other currencies.
A U.S. official told Reuters that the U.S. military carried out new airstrikes in Iran targeting a military site that officials concluded posed a threat to U.S. forces and commercial shipping in the Strait of Hormuz, hours after President Donald Trump denied an Iranian report about an agreement to restore traffic through the strategic waterway.
StoneX senior analyst Matt Simpson told Reuters: Geopolitical turmoil is still escalating, and we've had a lot of false alarms about the peace agreement negotiations. So I think the demand for the dollar will continue, and that means gold is likely to remain under pressure.
In a separate context, Federal Reserve Governor Lisa Cook said on Wednesday that she believes the Fed should keep the short-term interest rate unchanged for now, but with tariffs, the Iran war, and increased AI-related investments pushing up prices, she is prepared to raise interest rates if necessary.
Investors are awaiting US personal consumption expenditures data due later today for clues about the direction of US monetary policy.
