Gold fell more than one percent on Wednesday to its lowest level in 11 weeks, as a stronger dollar and rising oil prices compounded investor anxiety over US-Iran hostilities and their implications for interest rates.
Spot gold dropped 1.8 percent to $4,187.59 per ounce by 02:30 GMT, touching its weakest point since 23 March. US August gold futures fell 1.7 percent to $4,213.40.
The dollar’s rise made gold more expensive for holders of other currencies, adding pressure to a metal already facing headwinds from shifting rate expectations. Oil climbed one percent, stoking concerns that inflation could stay elevated and that the Federal Reserve will hold rates higher for longer.
“The real driver is the shift in Fed policy expectations, rising yields, and the dollar,” said Ilia Spivak, head of global macro at Tastylive. “I think all of these factors are casting a shadow on gold.”
The moves follow US strikes on Iran on Tuesday, launched after President Donald Trump said Tehran had shot down an American Apache helicopter in the Strait of Hormuz. The strike deepened uncertainty over any prospective peace agreement and added strain to what had been a fragile ceasefire.
Other precious metals also fell. Spot silver dropped 1.5 percent to $64.43 per ounce, platinum lost 2.8 percent to $1,678.10, and palladium slipped 0.8 percent to $1,212.31.
