NEW YORK: Gold slipped on Monday as renewed Middle East attacks stoked inflation worries and hawkish comments from Federal Reserve Chair boosted expectations for a September rate hike, though bullion remained on track for its biggest monthly gain since January.
Spot gold fell 0.1percent to USD4,448.19 per ounce by 1030 GMT, having touched its lowest level since August 19 earlier.
US gold futures for December delivery dropped 0.7percent to USD4,498.90.
Bullion declined over 3percent on Friday, in its biggest one-day fall since June 10, after Fed Chair Kevin Warsh,said at the Jackson Hole symposium that the US central bank would “have work to do” if policymakers were not confident inflation was returning to its 2percent target.
“Gold remains under pressure following Kevin Warsh’s hawkish address on Friday, while renewed US-Iran tensions are adding to inflation concerns, increasing expectations of a Fed rate hike before the end of the year,” ActivTrades senior analyst Ricardo Evangelista said. “A return above USD4,600 would probably require a weak US labour report and an easing of tensions in the Persian Gulf, allowing Treasury yields and the US dollar to soften,” Evangelista said. Traders have raised bets on a September rate hike to 62percent, from about 36percent before Warsh’s comments, according to the CME FedWatch Tool.
Oil prices rosemore than 3percent on Monday after the US attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran.
Despite the recent pullback, gold was still up more than 10percent this month, its biggest monthly gain since January. Bullion hit a more than three-month high of USD4,696.18 last week after the US Treasury announced plans to double liquidity-support buybacks of longer-dated bonds, raising concerns about currency debasement.
The US ADP employment report and the nonfarm payrolls data are due later this week. Elsewhere, spot silver rose 1percent to USD67.00 per ounce, and is up over 16percent this month after hitting its highest since mid-June on Friday.
Platinum slipped 1percent to USD1,802.45, and palladium slid 1.8percent to USD1,394.85. Both metals were headed for their biggest monthly rise since December.