Gold Declines Amid Renewed Hormuz Tensions as Market Awaits Federal Minutes

SadaNews - Gold declined for the second day following renewed attacks on shipping in the Strait of Hormuz, serving as a reminder of the risks facing vessels transporting oil and natural gas through the waterway.

The precious metal dropped by as much as 0.9% to near $4,122 an ounce, having shed 0.3% on Monday.

A tanker reported being struck east of Oman, while Axios reported that Iran launched at least two missiles at commercial ships transiting the strait.

Oil prices rose, reigniting concerns about inflation that increased the likelihood of interest rate hikes, which are a negative factor for gold that does not yield interest.

However, the metal is trading in a relatively tight range as investors await new insights into the Federal Reserve's interest rate outlook when the U.S. central bank releases the minutes of its June meeting later this week.

Rona O'Connell, Head of Market Analysis for Europe, the Middle East, Africa and Asia at StoneX Group Inc, wrote in a note: "Overall, the market is taking a slightly more cautious view on the potential for U.S. interest rate hikes." She added: "This has helped provide some support for hard assets."

Gold Moves Between Hormuz Risks and Interest Rate Bets

The precious metal is down nearly a fifth compared to where it was just before the war in the Middle East, even as it just exited its first weekly gain since May and bounced back above $4,000 an ounce after dropping below the psychological support level, as well as below several key moving averages.

O'Connell stated that light profit-taking has pushed gold back above its ten-day moving average, with technical indicators "suggesting there is room for some upward movement." She added: "The precious metal has encountered some resistance at $4,180, and is finding technical support above $4,130."

Spot gold dropped 0.6% to $4,138.55 an ounce at 10:34 AM Singapore time, while silver fell 0.9% to $61.51 an ounce.

There was little change in platinum, while palladium edged up slightly, with the Bloomberg Spot Dollar Index, a measure of the U.S. currency, remaining stable.

Silver Prices

Silver prices were also noted near $60 an ounce.