World gold prices fell by 1.4% on Monday amid a new wave of strikes between the US and Iran, which heightened fears of inflation and a possible interest rate hike by the US Federal Reserve. This was reported by Bloomberg, writes UNN.
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During trading, the price of gold dropped to nearly $4,060 per troy ounce. According to the agency, the escalation of the conflict in the Middle East contributed to rising energy prices, which could increase inflationary pressure.
Renewed geopolitical tensions have caused another shockwave in an already fragile gold market. If the fighting around the Hormuz zone is not resolved, rising oil prices, higher yields, and a stronger dollar could keep gold under pressure this week
Bloomberg notes that market participants fear the US Federal Reserve will have to keep interest rates high for longer to curb inflation. Higher rates traditionally negatively impact gold, as this asset does not generate interest income.
Additional investor attention this week will be focused on the speech of new Fed Chairman Kevin Warsh in the US Congress and the release of June inflation data, which could influence the further monetary policy of the American regulator.