Gold Plummets to Lowest Level Since March, Trump's Threat to Iran Weighs Down Sentiment
Gold extended its decline on Wednesday (June 10th) after US President Donald Trump renewed his threat to attack Iran, fueling concerns that oil supply disruptions could persist and keep inflationary pressures high. This has led the market to re-price the risk of higher US interest rates.
Spot gold prices fell 3.2% to US$4,125.61/oz at 12:41 p.m. New York time, reaching their lowest intraday level since March. This decline followed Trump's latest comments stating that the US would strike Iran "very hard," amid a renewed escalation near the Strait of Hormuz.
Tensions escalated after US forces attacked several Iranian sites near the Strait of Hormuz, following Trump's accusation that Tehran shot down a US helicopter off the coast of Oman. Iran then retaliated through its Revolutionary Guard Corps by launching missiles at four American targets. This escalation has again tested the already fragile ceasefire.
For the gold market, the conflict does not automatically act as a safe-haven catalyst. Investors' focus has shifted to the impact of energy inflation. If the Strait of Hormuz remains nearly closed and oil prices continue to rise, global inflationary pressures could persist for longer. In such a situation, the Fed could potentially maintain high interest rates or raise them again.
US economic data also adds to the pressure. Headline inflation reportedly accelerated the most in more than three years, reinforcing concerns that the US central bank lacks room to ease policy. Gold tends to be under pressure in a high interest rate environment because it doesn't pay interest or dividends.
Broadly speaking, gold is now around 22% below its pre-war level in late February. Silver also fell 0.6%, platinum weakened, and palladium strengthened. The Bloomberg Dollar Index edged down 0.1%, but the dollar's weakness was not enough to offset the pressure from the combination of geopolitical escalation, rising oil prices, and interest rate expectations. (Arl)*
Source: Newsmaker.id
