NEW YORK: Gold fell to a near four-week low on Tuesday, as inflation concerns remained heightened after US President Donald Trump appeared dissatisfied with Iran’s latest proposal to end the war, while investors await the US Federal Reserve monetary policy meeting this week.
Spot gold dropped 2.1percent to USD4,585.21 per ounce, as of 9:45 a.m. EDT (1345 GMT), its lowest level since April 2. US gold futures for June delivery fell 2percent to USD4,598.40.
“It’s revived pessimism about the peace process in the Middle East. The Trump administration rejected Iran’s most recent offer and so the strait remains closed.
That has driven oil prices up and revived concerns about inflation heading into the FOMC meeting this week. So that’s pushed gold to four-week lows,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Trump is unhappy with the latest Iranian proposal on resolving the two-month war, a US official said, dampening hopes for a resolution to the conflict that has disrupted energy supplies, fuelled inflation and killed thousands.
Oil prices rose more than 3percent as stalled efforts to end the Iran war kept the Strait of Hormuz largely closed, constraining Middle East supplies, though the UAE’s announcement that it would leave OPEC and OPEC+ trimmed gains. Elevated crude prices add to inflationary pressures, increasing the likelihood of higher interest rates.
While gold is traditionally seen as a hedge against inflation, high interest rates weigh on its appeal as a non-yielding asset. Investors expect the Fed to hold interest rates steady at its two-day meeting ending Wednesday.
They will also be eyeing Fed Chair Jerome Powell’s remarks closely. Other central bank decisions this week will also be on investors’ radar, including those from the European Central Bank, the Bank of England and the Bank of Canada.
Meanwhile, China, the world’s top gold consumer, imported a net 47.866 metric tons in March, up from 46.249 tons in February, Hong Kong Census and Statistics Department data showed on Tuesday. Spot silver fell 3.3percent to USD72.99 per ounce, platinum lost 1.9percent to USD1,956.69 and palladium was down 0.9percent at USD1,463.39.
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