Gold Falls, Fed Interest Rate Looms
Gold prices fell to US$4,040 per troy ounce on Monday. This decline occurred as uncertainty surrounding peace talks between the United States and Iran rekindled inflation concerns in global markets.
The US and Iran previously agreed to cease hostilities in the Gulf region and resume talks on the Strait of Hormuz. US President Donald Trump said Iran requested a meeting with an American delegation in Qatar on June 30, after Tehran launched missile and drone attacks on US military facilities in Kuwait and Bahrain.
Despite the planned peace talks, investors remain cautious as the situation in the Middle East is considered unstable. Trump also warned Iran of severe consequences if it fails to honor the peace agreement.
Pressure on gold is increasing as the market expects the Federal Reserve to raise interest rates this year. Currently, market participants are predicting three Fed rate hikes, with a roughly 60% chance of a September hike.
Gold is typically considered a hedge against inflation. However, in high interest rates, gold's appeal tends to weaken because it does not provide a yield. So far this month, gold prices have fallen more than 10% and are on track for a fourth consecutive monthly decline. Investors are now awaiting US employment data later this week to gauge the direction of the Fed's next policy. (gn)*
Source: Newsmaker.id
