Gold Drops Over 1% on Trump's Comments

Gold fell more than 1% to $4,050 an ounce on Wednesday, its lowest since July 2, after US President Donald Trump declared an interim peace deal with Iran "over," sending oil prices up over 5% and fueling fears of inflation and higher US interest rates. At NATO’s Ankara summit, Trump stated that the June memorandum of understanding with Iran was finished and that he had no intention of engaging with Tehran. The price surge followed Iran’s Revolutionary Guards’ announcement that they had targeted US military bases in Bahrain and Kuwait in retaliation for US strikes on Iran and the revocation of its oil sales license. Markets now see a 66% chance of a US rate hike in September, up from 62% on Tuesday. Meanwhile, China’s central bank reported its largest monthly increase in gold reserves in over two and a half years in June. Investors are now awaiting the Federal Reserve’s June meeting minutes, due later today, for further monetary policy signals.

Gold traded near $4,100 an ounce on Wednesday after dropping more than 1% in the previous session, as the US military launched fresh air strikes on Iran following recent attacks on ships transiting the Strait of Hormuz. The renewed escalation threatened the interim US-Iran peace deal and drove oil prices higher, stoking inflation fears and raising prospects for interest rate hikes. The US also revoked a waiver allowing Iran to sell crude on global markets, while the latest hostilities discouraged shipowners and regional producers from using Hormuz, raising the risk of renewed disruptions to global energy supplies. Meanwhile, investors awaited the minutes of the Federal Reserve’s June meeting for further clues on the policy outlook. Gold had recently rebounded after softer-than-expected US jobs data prompted markets to scale back expectations for near-term Fed rate increases, though the renewed Middle East tensions kept the outlook uncertain.

Gold trimmed earlier losses to trade flat at $4,170 per ounce on Tuesday, as investors assessed escalating Middle East hostilities and awaited the Federal Reserve’s June meeting minutes for clues on monetary policy. The precious metal had reached a two-week high on Monday after a softer-than-expected US jobs report led markets to scale back expectations for near-term interest rate hikes. However, persistent inflation concerns suggest the Fed may still maintain a "higher for longer" stance, with traders pricing in a 60% chance of a September rate hike. Meanwhile, oil prices edged higher after two tankers were struck in the Strait of Hormuz, and Iran stated it would halt peace talks unless President Trump ceased his repeated threats to restart the war. Elsewhere, China extended its gold-buying streak to 20 months, with reserves at 75.44M oz, while Hong Kong launched a gold clearing system and revived futures trading to boost its regional hub status.