Gold dropped by the most in over two weeks as renewed US-Iran tensions kept inflationary pressures high.
Spot prices fell as much as 3% to below US$4,000 ($5,779) an ounce, extending its decline from the previous session.
The conflict in the Middle East continues to dent gold’s investment appeal, as the resulting surge in energy prices fuelled concerns over global inflation.
This raises the chances of central banks raising interest rates, which weakens non-yielding assets like bullion.
In the United States, the CME Group’s FedWatch Tool currently shows a more than 70% chance of a rate hike in September.
“Renewed geopolitical tension has sent another shockwave through an already fragile gold market,” Hebe Chen, an analyst at Vantage Markets in Melbourne, tells Bloomberg.
Chen adds that a stronger dollar from the conflict “could keep gold pinned under pressure this week.”
Since the US-Iran conflict began in late February, gold has fallen by more than 20%, erasing all of its gains this year.
Write to Jackson Chen at Mining.com.au
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