(Bloomberg) — Gold declined as persistent concerns over inflation fueled bets that global central banks may be forced to hike interest rates. Silver slumped to the lowest in nearly two weeks.
Bullion slipped as much as 2.2% before recouping some of the losses. Concerns over price pressures stemming from the Iran war helped fuel a selloff in global bond markets, with 30-year yields climbing to a level last seen on the brink of the global financial crisis in 2007.
Elevated energy prices have stoked inflation fears, raising the risk that the Federal Reserve and other central banks may need to keep rates elevated rather than deliver the cuts investors had expected before the US and Israel launched their war on Iran. Lower rates benefit bullion, which doesn’t carry interest.
Gold has traded in a narrow range since falling sharply in the early days of the conflict as inflationary fears were moderated by the possibility of monetary easing on growth concerns. Bullion is down nearly 15% since the conflict erupted.
The fluidity with regards to the situation in the Middle East along with oil prices and bond yields may still weigh on gold in the short term, said Vasu Menon, a strategist at Oversea-Chinese Banking Corp. “We continue to see gold as a useful hedge against global uncertainties given significant political and economic changes happening globally, which look set to gather pace in the coming years,” he added.
Silver has swung wildly this month, climbing to nearly $90 an ounce last week on optimism around AI-related equities and demand for metals used in data-center infrastructure, before retreating to around $74 on Tuesday.
Spot gold was 1.8% lower at $4,486.63 an ounce as of 10:55 a.m. in New York. Silver was down 5% at $73.81. Platinum and palladium also declined.
–With assistance from Yihui Xie and Jack Ryan.
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