Gold Plunges More Than 2%, Oil the Main Pressure
Gold prices fell more than 2% in trading on Thursday (July 23rd) after hitting a two-week high the previous day. The decline occurred as conflict in the Middle East pushed up energy prices and rekindled inflation concerns.
Spot gold fell 2.1% to US$4,044.83 per troy ounce. Meanwhile, US gold futures for August delivery weakened 2.5% to US$4,047.80 per troy ounce.
Pressure also came from a 0.3% strengthening of the US dollar. A stronger dollar makes gold more expensive for buyers using other currencies.
In addition, the yield on the 10-year US government bond rose to its highest level in more than a year. The rising yield makes gold less attractive because the precious metal does not provide interest.
Brent oil prices broke US$100 per barrel for the first time since late May after the Houthis in Yemen claimed responsibility for attacks on two Saudi Arabian oil tankers. This situation has raised concerns about disruptions to global oil supplies.
Rising oil prices are believed to prolong inflationary pressures and force the Federal Reserve to maintain tight monetary policy for longer. Markets have even begun to increase expectations for an interest rate hike in September.
Investors are now awaiting the Fed's interest rate decision and a statement by Fed Chairman Kevin Warsh next week. A more hawkish or dovish policy tone than expected could potentially trigger significant movements in gold prices.
Source: Newsmaker.id
