Precise Investors Editorial Team
Spot gold had declined by 0.4% to $4,436.94 an ounce, while gold futures dropped 0.5% to $4,459.09 an ounce
Gold prices dropped on Thursday, touching a two-month low, as new strikes between Iran and the U.S. sent oil prices higher, keeping concerns over an energy-induced inflation spike in play.
By 13:05 GMT, spot gold had declined by 0.4% to $4,436.94 an ounce, while gold futures dropped 0.5% to $4,459.09 an ounce.
Iran said it had struck an American airbase, in retaliation for U.S. attacks on Iran earlier in the day.
The attacks marked a resumption in open hostilities between Iran and the U.S., despite repeated claims by the latter that a longstanding ceasefire remained in place. The U.S. attacked Iran earlier this week, framing the move as defensive.
Oil prices once again rose, staying under $100 a barrel but well above pre-war levels. Worries have abounded that the spike in oil prices would drive a burst of inflation, potentially persuading central banks to raise interest rates in response. This may not bode well for gold, a non-yielding asset which tends to underperform in higher-for-longer interest rate environments.
Rates markets are still displaying elevated central bank pricing, analysts at ING said in a note.
A gauge of inflation closely watched by the U.S. central bank rose as expected in April on an annualized basis, and decelerated marginally month-on-month, as investors kept tabs on the impact of the Iran war on prices and interest rates.
The core personal consumption expenditures price index, which strips out volatile items like food and fuel, came in at 3.3% in April, in line with expectations and above March’s reading of 3.2%.
Month-on-month, the reading stood at 0.2%, down from estimates that it would equal 0.3% in March.
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