Gold Falls Again, Trump Threatens Escalation Against Iran
Gold prices weakened on Thursday after US President Donald Trump threatened increased military action against Iran following Tehran's rejection of his push for peace talks.
Gold briefly fell as much as 2.1% and broke below US$4,420/oz before paring some of the losses. Iran, through state media, said it was demanding certain guarantees to end the conflict, including a commitment that the US and Israel would not resume attacks.
Since the war began nearly a month ago, gold has fallen more than 15%, moving in the same direction as stocks and inversely to oil. Surging energy prices have raised inflation risks and led markets to expect central banks to hold interest rates longer or even tighten, which weighs on gold as a non-yielding asset. However, the risk of a weakening US economy due to a prolonged war is seen as limiting the scope for aggressive tightening, as Wall Street cut its growth forecasts while raising its inflation and unemployment estimates.
Oil also rallied after Trump's warning, strengthening the energy inflation channel. Iran is also said to have begun drafting regulations to charge ships requesting safe passage through the Strait of Hormuz—a critical chokepoint for global energy supplies—which has remained effectively closed since the outbreak of the war.
At 9:36 a.m. in New York, spot gold fell 1.5% to US$4,437.18/oz. Silver fell 4.1% to US$68.28, while platinum and palladium also weakened; the Bloomberg Dollar Index edged higher.
Source: Newsmaker.id
