NEW YORK: Gold eased on Tuesday and was on track for its sharpest quarterly decline in 13 years, as inflation concerns stemming from the Middle East conflict reinforced expectations that the US Federal Reserve could hike interest rates.
Spot gold dropped 0.2percent to USD4,008.94 per ounce by 08:59 a.m. ET (1258 GMT) after hitting its lowest level since November earlier. Prices slid 11.3percent in June so far.
US gold futures dipped -0.4percent to USD4,022.70 per ounce. The precious metal was headed for its first quarterly decline since 2024 and its steepest since the June quarter of 2013, when the Gulf conflict stoked inflation concerns.
Although gold is typically seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal. “The markets are a little uneasy about how stable the MOU is and there’s pressure on gold because people are not seeing much light at the end of the tunnel,” Marex analyst Edward Meir, said.
Top US envoys who have arrived in Doha will not hold a high-level meeting with Iran, a Qatari official said, casting doubt on the progress of efforts to bring a lasting halt to the Iran war.
The US inflation readings remain stubbornly high and well above the Fed’s 2percent target. Markets expect the Federal Reserve to keep interest rates elevated for a prolonged period and may even consider further rate hikes,” Meir said, noting that these expectations were weighing on gold prices.