Gold saw a drop on Thursday, affected by fresh U.S. military operations in Iran that caused oil prices to rise. This development has raised worries about inflation and has introduced uncertainty about the direction of interest rates. Spot gold declined by 0.8% to $4,419.60 per ounce, as of 0129. Gold futures in the U.S. for June delivery saw a drop of 0.7%, closing at $4,417.10. The dollar increased in value, resulting in higher costs for bullion priced in greenbacks for those holding other currencies.
The U.S. military carried out further strikes in Iran targeting a military facility that officials deemed a possible threat to U.S. forces and commercial shipping in the Strait of Hormuz, as reported by a U.S. official. This event took place soon after President Donald Trump denied an Iranian assertion about a deal to restart movement through the crucial waterway. Oil prices rose by about 2% in early Asian trading on Thursday, as tensions between the U.S. and Iran continue to escalate.
Federal Reserve Governor Lisa Cook on Wednesday stated her view that the U.S. central bank should keep short-term interest rates at their current levels for now. She noted that due to factors like tariffs, the Iran conflict, and rising investments in AI pushing prices higher, she is prepared to increase rates if needed. On Wednesday, Federal Reserve Vice Chair Philip Jefferson remarked that the existing monetary policy is suitably aligned considering the ongoing upward risks to the inflation forecast.
Investors are eagerly awaiting the upcoming release of U.S. Personal Consumption Expenditures data, set for later today, to better understand the Federal Reserve’s direction on monetary policy. On Wednesday, the Hong Kong Futures Exchange revealed its strategy to introduce a market-wide trading fee discount and incentive programs for gold futures, with the goal of boosting liquidity and revitalising the contract. Spot silver decreased by 1.7% to $73.34 per ounce, platinum declined by 0.5% to $1,909.15, and palladium dropped by 0.7% to $1,381.64.