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Gold Prices Ease as Middle East Tensions Bolster US Dollar
Gold prices fell on Thursday, continuing a multi-day slide as a stronger U.S. dollar made the metal more expensive for holders of other currencies. Spot gold decreased by 0.2% to $4,070.81 per ounce, while gold futures saw a 0.1% dip to $4,079.47 per ounce. The dollar's strength is partly attributed to its safe-haven appeal amid escalating military conflict between the United States and Iran.
The recent escalation, which includes U.S. attacks on Iran following incidents in the Strait of Hormuz, has caused oil prices to surge. This has heightened market concerns about persistent, energy-driven inflation. Consequently, investors are anticipating that the Federal Reserve may need to maintain higher interest rates for longer to control rising prices, a scenario that typically benefits the dollar and weighs on non-yielding assets like gold.
The minutes from the Federal Reserve's June meeting, released Wednesday, indicated that policymakers were divided on the necessity of further rate increases this year. However, the report also revealed growing anxiety among officials about inflation remaining stubbornly above the central bank's 2% target. This sentiment suggests a hawkish stance could prevail if price pressures do not subside, further supporting the dollar.
AdOther precious metals showed mixed results amidst the market uncertainty. Spot silver declined by 0.5% to $58.0060 per ounce, tracking gold's downward movement. In contrast, spot platinum managed a slight gain, rising 0.5% to $1,594.0 per ounce.