Gold pulled back on Wednesday after gaining more than 2 per cent in the previous session, as rising oil prices rekindled inflation concerns and muddied expectations around US interest rates.
Spot gold fell 0.5 per cent to $4,035.67 per ounce by 03:00 GMT. August futures contracts dropped 0.7 per cent to $4,042.20.
Tuesday’s rally had taken gold above $4,100.49 per ounce, recovering from a two-week low after US consumer price index data showed inflation slowed by more than expected in June, driven partly by a decline in energy prices.
That momentum faded as oil extended its winning streak into a third consecutive session. President Donald Trump reimposed a naval blockade on all Iranian ports and threatened to target power stations and bridges next week unless Tehran returns to negotiations, the latest escalation in the ongoing conflict. Higher crude prices raise the prospect of inflation staying elevated for longer, which tends to weigh on gold since the metal offers no yield.
“I think the market has now moved past the CPI data, which is a bit of a lagging indicator,” said Kelvin Wong, market analyst at OANDA. “Trump continues to impose the blockade on ships leaving the Strait of Hormuz, which is causing oil prices to rise and putting gold under pressure.”
Among other precious metals, spot silver fell 0.3 per cent to $58.48 per ounce. Platinum edged up 0.2 per cent to $1,635.56, and palladium gained 0.2 per cent to $1,307.11.
