Spot Gold retreated on Wednesday, as Middle East hostilities flared anew, driving crude oil prices up and stalling US-Iran negotiations.
The US military said Iranian missile attacks on Bahrain, Kuwait and other regional targets had been either thwarted or failed.
According to a report by Reuters, US Secretary of State Marco Rubio said that President Donald Trump’s negotiating team had not offered Iran sanctions relief in exchange for reopening the Strait of Hormuz.
“The market is now looking at the possibility that this ceasefire with Iran may not hold even though Trump is going to push for a peace deal resolution,” Kelvin Wong, senior market analyst at OANDA, was quoted as saying by Reuters.
“If we start to see further escalation, that could also dampen whatever recovery that gold might have had.”
Oil prices surged over 1.5% on Wednesday, reinforcing inflation concerns.
Elevated energy costs have added to global inflation expectations and kept central bank policy makers wary of adopting a more dovish stance.
Cleveland Federal Reserve President Beth Hammack said yesterday the US central bank might need to hike interest rates soon should already-high inflation pressures keep building.
Federal Reserve Vice Chair for Supervision Michelle Bowman last week also spoke in favor of monetary policy tightening.
Spot Gold was last down 0.67% on the day to trade at $4,457.70 per troy ounce.
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