Gold, silver drop as central banks flag inflationary pressures from Iran war
Gold prices slumped on Thursday, as investors gauged the prospect of elevated interest rates and the inflationary effects of the U.S.-Israel war on Iran.
Spot gold fell 3.9% to $4,638.88 an ounce by 10:11 ET (14:11 GMT), while gold futures slid 5.2% to $4,645.99 per ounce. Spot silver prices also declined by 6.5% to $70.47 an ounce, News.Az reports, citing Reuters.
Strong U.S. producer inflation data, coupled with an outlook for higher U.S. inflation from the Federal Reserve, pressured gold earlier in the week, dragging prices well below the key $5,000 an ounce level and to a more-than one-month low.
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Gold broke below a $5,000-$5,200 an ounce trading range held for nearly a month after the Fed left interest rates unchanged on Wednesday, and signaled caution over the impact of the Iran war on price gains.
The fighting has appeared to intensify after Israel attacked the South Pars gas field, the Iranian sector of the world’s largest gas deposit, drawing bitter retaliation from Iran. Tehran launched attacks on several major energy facilities around the Middle East.
Oil and gas prices, which have already been climbing due to effective closure of vital Strait of Hormuz shipping lanes, spiked, fueling ongoing concerns over a potential surge in inflationary pressures around the world.
Markets are now betting that the Fed, wary of further igniting inflation, may have no appetite to cut rates in the near-term. CME FedWatch showed traders pricing in no rate cuts until at least September, later than they had previously anticipated.
By Faig Mahmudov
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