Gold Prices Weaken, US-Iran Conflict Sparks Inflation Concerns
Gold prices weakened again on Wednesday (July 8th), hovering around US$4,030 per ounce. This was the lowest level since July 2nd, after US President Donald Trump declared that the interim peace deal with Iran was "over."
Trump's statement sent oil prices soaring more than 5%, as markets reawakened concerns about the risk of energy supply disruptions from the Middle East. This rise in oil prices fueled concerns that inflationary pressures could rise again and keep US interest rates high for longer.
Speaking at the NATO summit in Ankara, Trump stated that he had no interest in resuming dealings with Iran. He also warned that Washington might launch additional attacks on Wednesday night, as tensions between the two countries escalated.
From a market analyst perspective, gold's weakening occurred because the market was more focused on the impact of rising energy prices on inflation and Federal Reserve policy. While gold typically finds support from geopolitical tensions, expectations of high interest rates can weigh on the precious metal, as the metal offers no yield.
The market now expects at least one Federal Reserve interest rate hike by the end of 2026. This situation limits gold's potential for strengthening, especially if the US dollar and Treasury yields remain strong amid rising geopolitical risks.
Source: Newsmaker.id
