Gold hits over 3-week low as MidEast tensions fan rate-hike fears

Gold fell on Wednesday to its ‌lowest in more than three weeks, as the escalating Middle East conflict lifted oil prices and stoked inflation and rate-hike fears, while investors focused on upcoming US jobs data.

Spot gold was down 0.6% ​at $4,304.01 per ounce by 0017 GMT, its lowest since August 7.

Prices were ​headed for a fourth straight session of losses and remained below ⁠the 200-day moving average, a closely watched technical level.

US gold futures for December delivery ​fell 1% to $4,350.80.

The US dollar held firm, making greenback-priced metals costlier for buyers using ​other currencies.

The US launched a barrage of airstrikes against Iran on Tuesday, prompting Iranian retaliation, in the most serious escalation in weeks.

Oil prices rose for a third straight session, while US Treasury yields ​advanced.

“A rebound in oil prices after renewed US-Iran tensions added to inflation concerns.

A ​pricier crude could continue to tighten monetary policy expectations and drive yields higher, limiting any rebound potential ‌for ⁠gold,“ said Bas Kooijman, CEO and asset manager of DHF Capital S.A.

Although gold is seen as an inflation hedge, higher interest rates weigh on its appeal as it offers no yield.

Traders are pricing in a 67% chance of a rate hike at the ​Federal Reserve’s policy meeting ​this month, according ⁠to the CME FedWatch Tool.

Fed Governor Michael Barr said if inflation does not cool quickly, it will be time for the central bank ​to raise rates. Last week, Fed Chairman Kevin Warsh nodded to ​the prospect ⁠of a rate hike.

The ADP employment report is due later in the day and the more crucial nonfarm payrolls data is due on Friday.

“Softer figures could ease the pressure on ⁠gold, while ​stronger data or more hawkish Fed comments may ​extend the decline,” Kooijman said.

Among other metals, spot silver lost 1% to $63.60 per ounce, platinum edged 1% lower ​to $1,722.23 and palladium fell 1.4% to $1,292.21.