Gold price (XAU/USD) trades 2.1% lower at around $4,170 during the European trading session on Wednesday.
The precious metal faces intense selling pressure as Iran has announced that negotiation terms with the United States (US) towards a permanent peace deal have returned under review, following attacks by Washington’s Central Command (CENTCOM)
Earlier in the day, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said that Tehran needs to reassess the terms of negotiations with Washington following overnight clashes, adding that the US has harmed the diplomatic process with its continued ceasefire violations. On late Tuesday, the US CENTCOM confirmed launching a series of attacks on Iran’s air defense, ground control stations, and surveillance radar sites near the Strait of Hormuz, a vital passage to almost 20% of global energy supply. These attacks were highly anticipated as US President Donald Trump vowed to retaliate against Tehran’s attack on the US Apache helicopter over the Hormuz.
The message from Iran pushing peace talks with the US under review again has prompted fears of a prolonged closure of the Hormuz, a scenario that will keep oil prices elevated, which will result in de-anchored inflation expectations and hawkish guidance from global central banks. Signs of tightening monetary conditions or higher for longer interest rates bode poorly for non-yielding assets, such as Gold. To get fresh cues regarding the current status of the US inflation, investors await the Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT.