Escalating US-Iran tensions push energy costs higher, reinforcing Fed rate-hike expectations and pressuring non-yielding assets like gold.
Gold (XAU/USD) fell to near $4,070 in early Asian trading Monday, extending losses as US-Iran military strikes heightened inflation fears. The US launched additional strikes against Iran on Sunday, targeting its ability to disrupt shipping in the Strait of Hormuz, according to military statements.
The conflict has driven up energy prices, stoking concerns over persistent inflation and reducing gold’s appeal amid expectations of prolonged high interest rates. Gold, typically a safe-haven asset, struggles in high-rate environments due to its lack of yield.
Traders are now focused on Tuesday’s US June Consumer Price Index (CPI) data. Analysts forecast a 0.1% month-over-month decline in headline CPI, while core CPI is expected to rise 0.3%. A softer-than-expected report could weaken the USD and provide temporary support for gold.