WASHINGTON (dpa-AFX) - Gold prices have inched lower on Monday following fading expectations of rate cuts by the U.S. Federal Reserve in the near-term as the U.S. and Iran lock horns over controlling the Strait of Hormuz after peace talks failed.
Front Month Comex Gold for June month delivery has slid by $18.10 (or 0.38%) to $4,769.30 per troy ounce.
Front Month Comex Silver for June month delivery has plunged by $0.758 (or 0.99%) to $76.005 per troy ounce.
The U.S.-Israel versus Iran war, which started on February 28, cooled off after the U.S. and Iran announced a two-week ceasefire last week.
High-level delegations from the U.S. and Iran met in Islamabad, Pakistan, on Saturday to arrive at a framework for discussing ways to end the hostilities.
Signs of diplomacy taking over military aggression to resolve the issues, boosted market sentiments.
Soon after the U.S. attacks halted last week, Iran gave clearance for only around 15 ships to pass through the Strait of Hormuz on a daily basis. In addition, Iran gave the seafarers a navigational map to circumvent the sea mines planted by Iran
On Sunday, renewed concerns of a massive escalation gripped markets after U.S. President Donald Trump stated that the Islamabad talks failed. Trump added that the meeting went well for close to 20 hours, but Iran had not agreed to the U.S. demand to halt its nuclear programs.
Trump then messaged via his Truth Social platform that U.S. forces will block ships entering or exiting Iran's ports from 10:00 a.m. ET, April 13 across the Strait of Hormuz.
Trump also claimed that the U.S. navy will destroy the sea mines that Iran has supposedly laid in the waterway. Ship owners are unsure to risk navigating through a channel, possibly laid with mines.
Threatening that U.S. forces are 'locked and loaded,' Trump stated that the U.S. military is prepared finish up 'whatever is left of Iran.'
U.S. Central Command clarified that it would allow only those ships that travel between non-Iranian ports but block all vessels entering or departing Iran's ports, impartially.
Iran's armed forces slammed the U.S. move as 'piracy' and warned that any military vessel closing in near Hormuz would receive a 'firm response.'
Over two hundred oil and energy tankers are stranded at sea, unable to export crude oil and energy from Arabian nations to Asia and Europe.
The collapse of the Islamabad talks triggered an increase in oil prices due to rising demand and supply concerns. Since the start of the gulf war, oil prices have soared by a whopping 55%.
WTI crude oil for May month delivery was last seen trading at $99.46 a barrel, up by $2.89 (or 2.99%).
With inflationary concerns shooting up again, the possibility of any rate cut by the U.S. Federal Reserve appears very slim.
As both the U.S. and Iran are preparing for a military confrontation, investors are betting now on a 99.50% chance that the U.S. Federal Reserve will hold interest rates at the current level at its upcoming meeting on April 28-29, according to CME Group's FedWatch Tool.
A stronger dollar renders gold prices expensive for overseas buyers.
A couple of days before, a report by the World Gold Council stated that gold prices fell by 12% in March.
On the economic front, it was an uneventful day for the U.S. aside from the existing home sales report by the National Association of Realtors, which showed a plunge by 3.60% from the previous month to an annualized rate of 3.98 million in March, contrary to expectations of a soft drop to 4.06 million annual units.
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