Gold Falls as Global Rate Hike Bets Rise

SadaNews - Gold maintained its decline, continuing to lack progress in reopening the Strait of Hormuz, fueling inflation fears and increasing bets that global central banks might raise interest rates.

The precious metal was trading around $4,472 per ounce, after falling nearly 2% on Tuesday. Price pressures arising from the war with Iran have intensified a wave of selling in global bond markets, with 30-year Treasury yields rising to levels last seen on the brink of the 2007 global financial crisis.

President Donald Trump threatened to resume strikes on Iran in the coming days as part of an effort to end the war, just a day after he said he postponed an American attack. The Republican-led U.S. Senate indicated its opposition to extending the conflict in a procedural vote on Tuesday.

Gold Under Pressure from High Yields

Rising energy prices have raised inflation concerns, increasing the expectation that the Federal Reserve and other central banks will need to keep interest rates high instead of implementing the cuts that investors had anticipated before the U.S. and Israel launched their war against Iran. Low interest rates benefit gold, which does not yield any interest.

Gold has traded in a narrow range since its sharp drop in the early days of the conflict, as the prospect of monetary easing due to growth concerns tempered inflationary fears. The precious metal has declined by 15% since the outbreak of the war.

Oli Hansen, Head of Commodity Strategy at Saxo Bank AS, wrote in a note: "The current environment highlights an increasingly important distinction between what short-term traders are focused on and what long-term investors continue to monitor."

He added that the lack of new flows into exchange-traded funds and volatility indices indicates "limited participation and a market awaiting a clearer catalyst."

Silver Drops After Strong Rally

Silver fell 5% on Monday due to rising inflation concerns, after it surged to nearly $90 per ounce last week, driven by optimism in artificial intelligence-linked stocks and demand for metals used in data center infrastructure. The white metal has decreased by 21% since February 27.

Silver prices were recorded near $74 per ounce.

Platinum and palladium rose slightly. The Bloomberg dollar spot index, a measure of the U.S. currency, stabilized after ending the previous session up 0.4%.