Gold Drops Below $4,000 as U.S. Rate Hike Bets Renew

SadaNews - Gold continued its decline to below $4,000 an ounce, as the United States and Iran sent mixed signals ahead of new talks to end a war that has fueled global inflationary pressures.

The precious metal fell by as much as 1.8% to $3,984, the lowest level during trading since November, after giving up nearly 2% in the previous session.

Washington stated that negotiations with Tehran are set to begin on Tuesday in Doha, while the Iranian Foreign Ministry said via "Telegram" that it will send a delegation of experts but ruled out direct talks.

Separately, Iranian Deputy Foreign Minister Kazem Gharib Abadi stated that Tehran intends to continue its plans to oversee traffic through the Strait of Hormuz, a move opposed by the United States, Europe, and Gulf states, highlighting the disagreements over the future management of the vital waterway.

Gold Breaks Key Technical Levels

Gold has lost about 25% since the war began in late February, breaking through key technical levels, including the 200-day moving average, which indicates long-term momentum.

Despite a decline in oil prices after sharp increases earlier in the war, forecasts still suggest that central banks will keep interest rates high for a longer period. This creates headwinds against non-yielding precious metals.

Additionally, a stronger dollar has put more pressure on gold priced in U.S. currency, making the metal more expensive for many buyers. The dollar index has risen more than 2% this month.

Hebei Chen, an analyst at Vantage Markets in Melbourne, said, "While a reduction in geopolitical tensions and declining oil prices may help alleviate inflation risks, the market is placing more importance on renewed expectations of U.S. rate hikes and the strength of the dollar in the second half, both of which increase the opportunity cost of holding gold."

She added, "Technically, selling pressure has also accelerated after prices broke through recent key support levels, transforming what began as profit-taking into a deeper short-term decline in momentum."

Fed Independence Increases Interest Pressure on Gold

The latest developments in the Middle East come after the U.S. Supreme Court ruled that Federal Reserve Governor Lisa Cook can remain in her position while facing an attempt by President Donald Trump to remove her over unsubstantiated mortgage fraud allegations.

The ruling bolsters the independence of the U.S. central bank, which is under pressure to lower rates, at a time when some Federal Reserve officials have indicated they may need to raise borrowing costs to contain inflation.

The latest U.S. inflation data released last week, despite rising, fell within analysts' estimates.

Spot gold dropped 1.3% to $3,962.80 an ounce at 10:40 AM in Singapore, and silver fell 1.7% to $57.28 an ounce. Platinum and palladium also declined, while the Bloomberg dollar index rose 0.2% after falling in the previous three sessions.

Silver Price

Silver prices also hovered around $57 an ounce.