WASHINGTON (dpa-AFX) - Partially offsetting the gains from yesterday's session, gold prices have edged lower on Tuesday as crude oil prices surged due to renewed Middle East tensions, and thereby, sparking inflationary concerns, while the U.S. dollar firmed amid reducing expectations of a near-term U.S. Federal Reserve rate hike.
Front Month Comex Gold for August month delivery has dipped by $13.60 (or 0.33%) to $4,153.90 per troy ounce.
Front Month Comex Silver for August month delivery has slumped by $1.055 (or 1.70%) to $61.050 per troy ounce.
Owing to persistent inflation since the gulf war began on February 28, pushing crude oil prices sharply higher, at the June 16-17 meeting, the U.S. Federal Open Market Committee decided to hold benchmark interest rates at the current 3.50% to 3.75%.
New Fed Chair Kevin Warsh refrained from offering any forward guidance on the rates, leaving the markets to rely on economic data releases to gauge the central bank's policy outlook. The Fed's Summary of Economic Projections (or Dot Plot) leaned on the hawkish side.
While some policymakers hinted at a rate hike in 2026, many concurred that the rates will prevail in the same range until year-end.
In the Middle East, the Strait of Hormuz was reopened by Iran after the U.S. and Iran signed an interim Memorandum of Understanding on June 17 whereby both nations agreed for a ceasefire for 60 days.
Oil-linked inflationary concerns eased following the resumption of shipping traffic across the Strait of Hormuz. However, Iran warned tankers to sail only through routes approved by Iran failing which the vessels have to face Iran's forceful response.
Today, according to the U.K. Maritime Trade Operations, a commercial tanker was hit by a projectile off the coast of Limah in Oman, which ignited a fire though no casualties or environmental impacts were reported.
Iran's state television merely announced that the vessel ignored warnings by Iranian forces.
Recently, following an attack by an unidentified projectile on a Singapore-flagged vessel and later on a Panama-flagged vessel, the U.S. and Iran traded attacks but later reconciled.
Today's hit is the third isolated incident of a projectile strike, prompting concerns of U.S. retaliation and threats of re-escalation.
On Monday, U.S. President Donald Trump urged Iran to strike a deal with the U.S. soon and warned that the U.S. will finish the job if it fails to do so.
Currently, the U.S.-Iran negotiations are halted owing to the multi-day funeral of Iran's late Supreme Leader Ayatollah Ali Khamenei until Thursday when the burial would complete.
In the U.S., last Thursday's nonfarm payrolls data indicated a cooling in employment. The economy added 57,000 jobs in June, far below a downwardly revised 129,000 in May and forecasts of 110,000, revealing the lowest job gain in four months.
Following this, market participants scaled down their Fed rate hike expectations.
Investors are currently betting on only a 25.10% chance of a quarter-basis-point interest rate-hike in the upcoming meeting of the U.S. Federal Reserve on July 28-29 while the bets on rates being held at the current level stand at 74.90%, according to the CME Group's FedWatch Tool.
The U.S. Dollar Index was last seen trading at 100.97, up by 0.11 (or 0.11%).
A stronger dollar pushes gold prices higher, making the yellow metal purchases expensive for overseas buyers.
Today, the U.S. Automatic Data Processing data revealed that private employers added an average of 21,000 jobs per week over the four weeks ending June 20, indicating a slight decline from the previous period's 24,250 gain.
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