Gold Edges Lower On Oil-led Inflation Concerns

(RTTNews) - Gold prices were notably lower on Thursday as traders focused on inflation risks stemming from higher energy prices and supply disruptions linked to the Iran war.

While softer-than-expected U.S. inflation data eased concerns about near-term Federal Reserve interest-rate hikes, there are fears that higher energy prices as a result of mounting geopolitical risks in the Middle East could keep interest rates elevated.

Federal Reserve Bank of New York President John Williams said on Wednesday that inflation may have peaked and should begin easing but remains "unquestionably too high".

Federal Reserve Chairman Kevin Watch told the House Financial Services Committee on Tuesday that policymakers at the central bank have no tolerance for high inflation, and the number one objective is to get monetary policy right.

Fed funds futures currently point to the possibility of one to two rate hikes by the end of the year.

Spot gold dipped 0.7 percent to $4,032.49 an ounce while U.S. gold futures were down 0.3 percent at $4,040.47.

The U.S. dollar was broadly lower while U.S. Treasury yields edged higher ahead of key retail sales and jobless claims data due later in the session.

Brent crude futures traded below $85 a barrel but stayed close to one-month highs as investors weighed escalating tensions in the Middle East.

After the United States launched a new wave of attacks in multiple locations across Iran on Wednesday night, Iran retaliated by launching fresh attacks on U.S. military bases in neighboring Gulf States, raising concerns over global shipping.

Amid continued conflict, missile strikes, and diplomatic efforts surrounding Iran, U.S. President Donald Trump said Teheran will be "defeated very soon".

Media reports suggest that Trump is leaning toward further expanding U.S. military operations in Iran, including sending ground forces and the possible seizure of Kharg Island, Iran's primary oil export terminal.

Iran said it has no plans for negotiations and remains focused on its defense. Iran's top negotiator, Mohammed Bagher Ghalibaf, has declared that the county's armed forces have "complete freedom of action" against the "enemy's aggression".

Iran is fighting an "existential war" against the United States as Washington pursues objectives that extend beyond changing Iran's government, Ghalibaf said.