Gold fell on Sept 2 to its lowest in more than three weeks, as the escalating Middle East conflict lifted oil prices and stoked inflation and rate-hike fears, while investors focused on upcoming US jobs data.
Spot gold was down 0.6 per cent at US$4,304.01 per ounce by 8.17am Singapore time, its lowest since Aug 7.
Prices were headed for a fourth straight session of losses and remained below the 200-day moving average, a closely watched technical level.
US gold futures for December delivery fell 1 per cent to US$4,350.80.
The US dollar held firm, making greenback-priced metals costlier for buyers using other currencies.
The US launched a barrage of airstrikes against Iran on Sept 1, prompting Iranian retaliation, in the most serious escalation in weeks.
Oil prices rose for a third straight session, while US Treasury yields advanced.
“A rebound in oil prices after renewed US-Iran tensions added to inflation concerns. A pricier crude could continue to tighten monetary policy expectations and drive yields higher, limiting any rebound potential for gold,” said Bas Kooijman, chief executive officer and asset manager of DHF Capital S.A.
Although gold is seen as an inflation hedge, higher interest rates weigh on its appeal as it offers no yield.
Traders are pricing in a 67 per cent chance of a rate hike at the Federal Reserve’s policy meeting in September, according to the CME FedWatch Tool.
Fed Governor Michael Barr said if inflation does not cool quickly, it will be time for the central bank to raise rates.
Last week, Fed Chairman Kevin Warsh nodded to the prospect of a rate hike.
The ADP employment report is due later in the day and the more crucial nonfarm payrolls data is due on Sept 4.
“Softer figures could ease the pressure on gold, while stronger data or more hawkish Fed comments may extend the decline,” Kooijman said.
Among other metals, spot silver lost 1 per cent to US$63.60 per ounce, platinum edged 1 per cent lower to US$1,722.23 and palladium fell 1.4 per cent to US$1,292.21. REUTERS
