Gold prices moved slightly lower on Thursday. The metal remained under pressure from a stronger U.S. dollar, as renewed U.S.-Iran military action raised fresh concerns about inflation and interest rates.
The Federal Reserve’s June meeting minutes offered little support for gold. The minutes showed that policymakers were divided over whether further rate hikes may be needed.
Gold Prices Move Lower
Spot gold fell 0.5% to $4,057.81 an ounce.
Gold futures also declined 0.4% to $4,067.32 an ounce by 00:45 ET.
U.S.-Iran Conflict Raises Inflation Concerns
Gold was heading for a third straight day of losses after renewed U.S.-Iran military activity pushed oil prices higher.
Rising oil prices increased concerns about energy-driven inflation. Investors also worried that stronger inflation could keep interest rates elevated for longer.
Stronger Dollar Pressures Gold
The U.S. dollar benefited from expectations of higher inflation and tighter monetary policy.
The dollar index remained close to the 13-month highs reached in June. A stronger dollar usually weighs on gold because it makes the metal more expensive for buyers using other currencies.
Analysts Warn About Higher Rates
ANZ analysts said that any rebound in energy prices could strengthen expectations that the Fed may keep interest rates higher for longer.
Higher rates are usually negative for gold and other precious metals. This is because gold does not offer yield, making it less attractive when interest-bearing assets become more rewarding.
Latest Iran Tensions Hit Market Sentiment
The United States launched several attacks on Iran this week.
President Donald Trump said that a ceasefire with Iran was over. The latest tensions followed Iranian attacks on vessels attempting to pass through the Strait of Hormuz.
Precious Metals Trade Mixed
Other precious metals were also mostly subdued on Thursday after following gold lower in recent sessions.
Spot silver fell 0.7% to $57.8635 an ounce. Spot platinum, however, rose 0.7% to $1,598.13 an ounce.
Fed Minutes Show Policy Split
The Federal Reserve’s June meeting minutes were less dovish than some markets had expected.
Policymakers appeared divided over whether more rate hikes may be needed this year.
However, the minutes also showed growing concern about sticky inflation. If price pressures remain elevated, the Fed could consider further tightening later in the year.
Inflation Still Above Fed Target
U.S. inflation has risen sharply since the start of the U.S.-Iran war in late February.
Price growth remains well above the Fed’s 2% annual target. Fed Chair Kevin Warsh recently repeated the central bank’s commitment to bringing inflation back to that level.
