Gold slips to weekly low amid US-Iran tensions and stronger dollar
Credit: Reuters
Spot gold was down 0.4% at $4,810.26 per ounce, as of 1:32 p.m. EDT (1732 GMT), after hitting its lowest price since April 13 earlier in the session.
U.S. gold futures for June delivery settled 1% lower to $4,828.8.
The U.S. dollar (.DXY), opens new tab rose to its highest level in a week before paring gains, as renewed U.S.-Iran tensions caused uncertainty in markets about the chances of a peace deal. Benchmark 10-year U.S. Treasury yields gained, increasing the opportunity cost of holding non-yielding bullion.
RISK CEASEFIRE WILL NOT HOLD
"The situation in the Middle East has clearly intensified again, shifting our gold forecast tilted slightly to the downside amid increased risks of another sharp spike in oil prices, which could result in a higher dollar and bond yields," said Fawad Razaqzada, market analyst at City Index and FOREX.com.
A ceasefire between the U.S. and Iran appeared in jeopardy on Monday after the takeover of the cargo ship. Oil prices jumped around 5% on fears the ceasefire would collapse, and as flows through the Strait of Hormuz remained largely halted.
Though gold is considered an inflation hedge, demand for the non-yielding asset tends to shrink when global interest rates are high. Rates could remain higher for longer as a result of heightened inflation due to the war in the Middle East.
"Gold traders on this day are choosing the bearish daily elements (higher dollar, yields) for the metals. Technically, June gold futures bulls' next upside price objective is to produce a close above solid resistance at $5,000," Jim Wyckoff, senior analyst at Kitco Metals, said in a note.
Among other metals, spot silver lost 1.3% to $79.76 per ounce, platinum fell 1.4% to $2,073.28, and palladium was down 0.2% at $1,556.00 after touching a one-week low earlier.
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