New Delhi: Gold prices declined on Wednesday to their lowest point in nearly a week. US strikes on Iran pushed oil prices and the dollar higher, raising worries that inflation may sustain elevated interest rates and pressure non-yielding bullion.
Spot gold dropped 0.1 percent to 4,100.32 dollars per ounce by 0107 GMT after touching its lowest level since July 2. August US gold futures fell 1.1 percent to 4,112.50 dollars.
The US military carried out fresh strikes against Iran on Tuesday and withdrew a permit for Iranian oil sales following attacks on three tankers in the Strait of Hormuz, straining a fragile ceasefire.
US oil prices rose almost 3 percent in early trading, building on prior gains, while the dollar held near weekly highs against other currencies.
Markets raised the probability of a Federal Reserve rate increase in September to over 67 percent from about 57 percent on Tuesday, according to the CME FedWatch tool.
Investors awaited minutes from the Federal Open Market Committee’s June meeting, due later Wednesday, for more signals on rates.
Although gold serves as an inflation hedge, higher rates usually reduce appeal for the asset. US consumers expressed greater concern over near-term inflation in June, per a New York Fed report.
China’s central bank recorded its largest monthly gold reserve increase in over two and a half years during June. Beijing and Hong Kong introduced steps to strengthen currency, bond and gold trading in Hong Kong, including a new gold clearing system and revived dollar gold futures.
