Gold prices fell to their lowest level in two months in Thursday's trading session as new US attacks on Iran caused the USD to rise sharply and oil prices to rise, raising concerns about inflation as well as casting a shadow over global interest rate outlook.
As of 2:45 PM Vietnam time, spot gold prices fell 1.46% to 4,389.15 USD/ounce, after at one point falling to the lowest level since March 26. Meanwhile, US gold futures for June delivery fell 1.6% to 4,373.90 USD/ounce.
The USD rose to its highest level in a week, making gold valued at the greenback more expensive for investors holding other currencies.
Mr. Matt Simpson - Senior Analyst at StoneX - said that geopolitical tensions are still high and the market has witnessed signals of peace breaking too many times.
The USD is likely to continue to maintain its strength and that means gold prices are still under pressure," he said.
According to a US official, the US military has conducted more airstrikes targeting a military site in Iran that Washington believes could pose a threat to US forces as well as commercial transportation through the Strait of Hormuz.
This move comes just hours after US President Donald Trump denied information from Iran about the possibility of reaching an agreement to restore traffic through this strategic shipping route.
Oil prices rose more than 3% on Thursday after the Iranian Islamic Revolutionary Guard Corps announced it had targeted a US airbase in response to previous attacks.
High oil prices may continue to drive inflation and force central banks to maintain high interest rates for longer.
Although gold is often seen as a hedging tool against inflation, high interest rates are detrimental to precious metals because gold does not yield yields.
Investors are turning their attention to US Personal Consumption Expenditures (PCE) data released on the same day to find more signals about the Fed's monetary policy roadmap.
On the other precious metal market, spot silver prices fell 2.6% to 72.70 USD/ounce, while platinum fell 1.7% to 1,884.83 USD/ounce. Both metals previously touched their lowest level in nearly a month.
Palladium prices also decreased 2% to 1,362.70 USD/ounce.
