WASHINGTON (dpa-AFX) - Gold prices have slumped on Monday, partially offsetting two sessions of gains as threats to progress in U.S.-Iran peace talks following mutual weekend attacks rekindled concerns of oil-linked inflation and increased expectations of a U.S. Federal Reserve rate hike.
Front Month Comex Gold for August month delivery has tumbled by $56.50 (or 1.38%) to $4,039.80 per troy ounce.
Front Month Comex Silver for August month delivery has also slumped by $1.049 (or 1.76%) to $58.415 per troy ounce.
After a Memorandum of Understanding was signed between U.S. President Donald Trump and Iran's President Masoud Pezeshkian on June 17 according to which both nations should halt attacks for a 60-day period, crude oil prices started declining from its recent sky-high numbers.
The immediate reopening of the Strait of Hormuz by Iran led to the resumption of shipping traffic in the Persian Gulf.
Following the signing, an initial round of talks between the U.S. and Iran in Switzerland aimed at formulating a framework agreement for discussions ended on Monday with U.S. Vice President JD Vance stating that good progress was made.
Trump claimed credit for falling oil prices and connected it to the U.S.-Iran MoU.
Over the past few days, both sides sent contradictory messages on the ownership and management of the strait.
Last Thursday, an unknown projectile hit a Singapore-flagged commercial vessel, Ever Lovely, transiting via Omanian waters across the strait. Trump called the strike a foolish act of ceasefire violation.
On Friday, U.S. Central Command announced striking Iranian missile and drone storage locations and coastal radar sites near the southern Iranian port of Sirik.
In retaliation, Iran's Islamic Revolutionary Guard Corps announced hitting ballistic missiles and drones on eight U.S. military installations at the Ali al-Salem base in Kuwait and the Fifth Naval Fleet in Port Salman, Bahrain.
Again on Saturday, a Panama-flagged tanker, Kiku, was hit by an unidentified projectile. The vessel was carrying more than two-million barrels of crude oil.
In response, U.S. forces launched another strike in southern Iran, around Tahrui village, near the port of Sirik.
U.S. Navy and Air Force fighter jets targeted nearly 10 Iranian military sites near the Strait of Hormuz.
Trump warned that if Iran deviates from the expectations of the U.S., more attacks could follow.
The brief skirmish drove up crude oil prices and oil-linked inflation concerns returned to the table. WTI crude oil for August month delivery was last seen trading at $70.96 up by $1.73 (or 2.50%).
Control over the Strait of Hormuz remains the focal point of dispute as Iran wants every ship passing through the strait, either through Iranian territorial waters or Omanian territorial waters, to coordinate with Iranian authorities and get appropriate clearances.
Experts are of the view that the U.S. disagrees with Iran for seeking clearance for travel through Omanian waters.
Trump announced through his social media platform Truth Social that Iran has requested a meeting which he stated is scheduled for Tuesday in Doha, Qatar.
Prior to this, Iran's Deputy Foreign Minister Kazem Gharibabadi stated there were no planned 'technical team' meetings with the U.S. officials in Qatar this week. Of note, so far Iran has not officially confirmed any meetings.
Economists are concerned as a renewed escalation could re-send crude oil prices to levels from before June 17.
Media reports, citing a U.S. official stated that technical talks are slated to continue on all areas of the MoU and that both sides have agreed to stand down for now. The officials reaffirmed free movement of shipping across the Strait of Hormuz.
On the economic front, there were no significant releases for today except for the Dallas Fed's general business activity for Texas manufacturing which was broadly unchanged in June following a 0.40% increase in May, according to Federal Reserve Bank of Dallas.
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