World gold prices fell in the trading session on July 27, as tensions in the Middle East temporarily subsided, pulling oil prices down, thereby reducing concerns about inflation and expectations of interest rate hikes in the US.
Spot gold prices slightly decreased by 0.04% to 4,091.23 USD/ounce. Meanwhile, US gold futures contracts increased by 0.59% to 4,095.00 USD/ounce.
The weakening USD also supports the precious metal. The USD index (DXY) fell 0.3%, making gold more attractive to buyers holding other currencies.
Meanwhile, oil prices fell more than 6% in the session. Since the conflict in the Middle East broke out at the beginning of the year, rising oil prices have increased concerns about inflation and expectations of central banks raising interest rates.
This development puts pressure on gold. Although often considered an inflation hedging asset, gold does not bring yields, so it becomes less attractive when the general level of interest rates increases.
The market is currently focusing its attention on the meeting of the US Federal Reserve (Fed) on July 28-29. It is widely expected that the Fed will keep interest rates unchanged at this meeting.
According to CME FedWatch Tool, traders are assessing about 74% of the Fed's ability to raise interest rates in September.
On the precious metals market, spot silver prices increased by 2.13% to 59.41 USD/ounce. Platinum increased by 2.66% to 1,635.11 USD/ounce, while palladium increased by 2.48% to 1,284.75 USD/ounce.
