XAU/USD drops from a two-week peak as Middle East tensions lift crude prices and fuel expectations of tighter US monetary policy.
Gold prices fell on Thursday, ending a four-day rally as the US Dollar strengthened and investors priced in a higher likelihood of a Federal Reserve rate hike. XAU/USD traded near $4,090 after reaching $4,165 on Wednesday, its highest level in two weeks.
Oil prices surged to their highest since June 11, with WTI crude near $89.50 per barrel, up 28% this month. Escalating Middle East tensions, including US strikes on Iran and Houthi attacks on Saudi tankers, disrupted supply routes. The CME FedWatch Tool now shows a 78% chance of a September rate hike, up from 52% a week ago.
Higher energy costs stoked inflation fears, reinforcing expectations of tighter monetary policy. The 10-year US Treasury yield rose to 4.64%, its highest since May 20, further pressuring non-yielding assets like gold.