Gold prices extended their decline on Wednesday, touching its lowest level in almost two weeks as the U.S. dollar climbed to a more than one-year high due to rising bets on U.S. interest rate hikes. Spot gold fell 1.1% to $4,064.01 per ounce by 0431 GMT, having earlier hit its lowest since June 11, while U.S. gold futures for August delivery declined 1.7% to $4,080.80. The precious metal has now fallen about 23% since the onset of the U.S.-Israeli war on Iran in late February, as mounting inflationary pressure has given way to expectations of interest rate hikes by the U.S. Federal Reserve. According to The Hindu BusinessLine, traders are pricing in three interest rate hikes from the U.S. Federal Reserve this year, compared with bets of one hike before last week's Fed meeting, citing the CME FedWatch Tool.
U.S.-Iran peace talks have encountered significant obstacles, with conflicting signals emerging from both sides regarding nuclear inspections. U.S. President Donald Trump said on Tuesday that Iran had agreed to nuclear inspections into "infinity," while Tehran said it had made no such concession in negotiations, raising questions about the viability of their fragile peace deal. The two sides also disagreed on the details of a provision that would allow Iran access to funds frozen in overseas accounts. As reported by The Hindu BusinessLine, Ilya Spivak, head of global macro at Tastylive, noted that "What we're witnessing here is the evolution of the pressure that gold came under as a function of the war." The dollar's strength has been further supported by easing geopolitical tensions in the Middle East, with the greenback also drawing support from the rebound in oil prices.
Oil prices fell on Wednesday, extending this week's losses and trading near four-month lows hit in the previous session, on signs that more oil tankers stranded in the Gulf since the start of the Iran war are set to move out of the Strait of Hormuz. Brent crude futures were down 37 cents, or 0.5%, at $76.71 a barrel, while U.S. West Texas Intermediate slipped 36 cents, or 0.5%, to $72.85 a barrel. Both benchmarks declined nearly 1% on Tuesday, touching their lowest levels since early March. The recovery in oil flows through the Strait of Hormuz has reduced geopolitical premiums in crude prices, with some vessels beginning to resume their journeys including 12 fertilizer-laden ships bound for India that had been stranded near the chokepoint since the start of the US-Israel-Iran war. Four Qatari LNG tankers transited the strait, while two tankers carrying nearly 2 million barrels of crude oil passed through the waterway.
Other precious metals showed continued weakness as commodity markets traded lower on June 24. Spot silver fell 1.6% to $61 per ounce, while platinum lost 1.2% to $1,632.04, and palladium was down 1% at $1,225.35. According to The Hindu BusinessLine, Ilya Spivak from Tastylive noted that "While gold is traditionally seen as an inflation hedge, it loses its appeal as a non-yielding asset in a high-interest-rate environment." The dollar's strength has made bullion more expensive for overseas buyers, with the greenback also drawing support from the rebound in oil prices. Meanwhile, the Japanese yen hovered near a four-decade low against the dollar, while investors now await the U.S. Personal Consumption Expenditures data, the Fed's preferred inflation gauge, due on Thursday for further cues on monetary policy.
