Gold prices fell close to $4,000 in intraday trading on Wednesday as market sentiment changed following the resurgence of tensions between the United States and Iran.
At 9 am, gold prices were trading at $4,071, down 0.13% since it opened early Thursday in Asian trading.
US President Donald Trump reportedly said that the ceasefire with Iran had ended. He also threatened to resume military action and reimpose sanctions on Iran following the attack on a tanker passing through the Strait of Hormuz.
The increased geopolitical tensions have raised concerns about rising energy prices that could push global inflation higher. This has reinforced expectations that the Federal Reserve (Fed) may keep interest rates at high levels for a longer period.
High interest rates usually put pressure on gold because the precious metal does not offer a return in the form of interest.
According to the CME FedWatch tool, swaps traders are now placing a greater than 30% probability that the Fed will raise interest rates at its next meeting, up from less than 20% last week.
Meanwhile, minutes of the Fed’s June 16-17 meeting, released on Wednesday, showed that some officials still saw a case for raising interest rates.
While rates were left on hold at the time, the minutes also showed concerns about inflation were rising, while concerns about the labor market were beginning to ease.
