WASHINGTON (dpa-AFX) - Adding to two sessions of losses, gold prices have slumped on Tuesday as crude oil prices continued to skyrocket following fresh weekend attacks between the U.S. and Iran, which increased expectations of rate hike bets in the U.S. to contain the consequent inflation.
Front Month Comex Gold for October month delivery has tumbled by $87.00 (or 1.96%) to $4,359.80 per troy ounce.
Front Month Comex Silver for October month delivery has plummeted by $1.576 (or 2.37%) to $64.880 per troy ounce.
After more than a month's hiatus in the gulf war between the U.S. and Iran, which entered its seventh month last Friday, U.S. forces struck Iran on Sunday, triggering fierce backlash.
U.S. forces struck two rocket launchers on Larak Island in the Strait of Hormuz, near the port of Bandar Abbas, aiming to disable the Iran's Islamic Revolutionary Guards Corps' attempts to re-lay sea mines in the Strait of Hormuz.
Last week, U.S. President Donald Trump claimed that U.S. forces have cleared all the mines laid earlier by Iran.
In retaliation, Iran launched missiles targeting U.S. airbases in Jordan, the King Hussein and Al Azraq. Jordan announced that its military intercepted eight missiles.
Vowing a fitting response, Trump stated that the U.S. will hit Iran back hard.
The situation precipitated further after Trump posted an AI-generated video, through Truth Social, depicting the bombing of Kharg Island. The island is a vital hub for Iranian oil exports. U.S. Vice President JD Vance substantiated Trump's action as sending a message to the Iranians.
After the U.S. administration announced a massive trade embargo on Iran last Monday, experts were of the view that Trump opted to halt military maneuvers and pressure Iran only through economic blockades. However, this sudden flare-up has altered the situation, leaving traders uncertain on how the events would unfold.
Amid this clash, the Strait of Hormuz remains shut, with seafarers avoiding navigation as the U.S. and Iran sent conflicting messages on who controls the strait. While Iran warned all ships to coordinate with the Iranian military, Trump claimed that the route is protected by the U.S.
Adding to the tension, citing three officials, Axios reported that Trump and his senior aides are considering carrying out limited strikes on Iran to disable its capabilities to target ships transiting the strait.
Last Friday, U.S. Federal Reserve Chair Kevin Warsh stated that if inflation does not come down close to 2%, the central bank would have 'work to do,' signaling that the Fed may rise interest rates. Following this, gold fell more than 3% after reaching a three-month high last week.
CME Group's FedWatch Tool shows that investors are currently betting on a 68.20% chance of a 25-basis-point interest rate-hike at the upcoming meeting of the U.S. Federal Reserve on September 15-16, while the odds on rates being held at the current level stand at 31.80%.
Investors are awaiting Wednesday's ADP employment report as well as Friday's non-farm payrolls data to better understand the U.S. economy's trajectory.
Expectations of an interest rate increase in the U.S. would strengthen if the job numbers are stronger-than-expected, and pressure precious metals. Any sign of weakness in the labor market would lower the bets on rate hikes.
The S&P Global U.S. Manufacturing Purchasing Managers' Index was at 53.90 for the third consecutive month in August, revised higher from the flash estimate of 53.20, aligning with the initial market expectations.
The Institute for Supply Management's manufacturing PMI fell to 54.60 in August from July's four-year high of 55.60, below market expectations of 55.2.
According to the U.S. Bureau of Labor Statistics, the Job Openings and Labor Turnover Survey revealed that job openings increased by 89,000 to 7,271,000 in July from a downwardly revised 7,182,000 in June, below market expectations of 7,300,000.
The number of workers voluntarily leaving their jobs decreased by 157,000 to 3,060,000 in July from a revised 3,210,000 of the prior month.
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