WASHINGTON (dpa-AFX) - Gold prices have slumped on Monday, more than offsetting the incremental gains from Friday's session as forecasts for a higher interest rate in the U.S. increased following recent inflation data.
In addition, rising supply disruption concerns after Saudi Arabia announced closing its vital transport pipeline which led to a surge in crude oil prices weighed on the yellow metal.
Front Month Comex Gold for October delivery has tumbled by $58.30 (or 1.33%) to $4,316.50 per troy ounce.
Front Month Comex Silver for October delivery has also slumped by $0.938 (or 1.45%) to $63.745 per troy ounce.
On Friday, while delivering an address on the sidelines of the BRICS Summit in India, Iran's President Masoud Pezeshkian called the U.S. and Israeli forces the 'real militants' and asserted that Iran will not surrender to bullying or oppression from the U.S. and Israel.
After meeting Crown Prince of Abu Dhabi Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Pezeshkian stated that they agreed to put the past behind and look to the future. Of note, this is the first meeting of the leaders from the two nations since the gulf war began in February.
Meanwhile, yesterday on his trip to Ireland, U.S. President Donald Trump once again asserted that the U.S.-Iran war would end by this year, most likely after the midterm elections in the U.S. in November.
Repeating that gasoline prices would 'drop like a rock' after that, Trump remarked that the U.S. could even possibly stay in Iran and keep the oil, drawing a parallel to last year's U.S. takeover of Venezuela's oil reserves.
Claiming that Iran is calling constantly to resume peace talks, Trump observed that the U.S. would only make a deal with Iran if it is the right one and not something that does not benefit the U.S.
A meeting between high-level officials from the member nations of the Gulf Cooperation Council (without Bahrain) was slated to be held in Salalah of Oman today to explore ways to end the U.S.-Iran war and push Iran to reopen the Strait of Hormuz.
However, last night, the region's officials announced the postponement of the meet without specifying a new date.
Facing severe attacks by the Iran-linked Houthi militant group of Yemen, Saudi Arabia's Ministry of Energy confirmed shutting down its 1,200 km long East-West Pipeline.
Supply disruption concerns mounted after this announcement as Saudi Arabia utilized this line to bypass the logjam in the Strait of Hormuz.
Today, a spokesperson for Iran's Ministry of Foreign Affairs Esmaeil Baghaei stated that Saudi Arabia requested the postponement due to the events unfolding in Yemen.
With no end to the gulf conflict in sight, crude oil prices re-surged back to the 100-plus a barrel levels.
WTI crude oil for October delivery was last seen trading at $101.61, up by $1.56 (or 1.56%).
In the U.S., last Friday's data showed that the Consumer Price Index increased 0.4% in August. On an annual basis, the CPI steadied at 3.4%, in line with forecasts.
The core CPI increased by 0.3% in August above market expectations of a 0.2% rise. On an annual basis, matching market predictions, the core CPI eased to 2.4% from 2.5% of the previous month.
According to the CME Group's FedWatch Tool, investors are currently betting on a 90.70% chance of a 25-basis-point interest rate hike at the upcoming meeting of the U.S. Federal Reserve on September 15-16.
The bets on a rate hike were hovering around 60% prior to the release of the Producer Price Index last Thursday, and increased to 70% after the data release.
In addition, analysts from Goldman Sachs and HSBC have speculated a 25-basis-point rate hike.
Consequently, appeal for non-yielding bullion fell amid increasing forecasts of a possible high interest regime in the U.S. in the near-term.
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