Gold declines below $4,100 as fresh US-Iran strikes stoke inflation fears
Gold price (XAU/USD) attracts some sellers to near $4,070 during the early Asian trading hours on Monday. The precious metal extends its decline amid escalating tensions between the US and Iran. Traders will take more cues from the release of the US June Consumer Price Index (CPI) inflation data, which is due on Tuesday.
The US military said that it launched additional strikes against Iran on Sunday aimed at further weakening the Islamic Republic’s ability to strike civilian vessels transiting the Strait of Hormuz, Bloomberg reported. The US Central Command (CENTCOM) said in a social media post that the strikes were designed to limit Iran’s ability to attack civilian ships in the Strait of Hormuz.
Ongoing missile strikes between Washington and Tehran have boosted energy costs, triggering fresh inflation concerns and forcing the US Federal Reserve (Fed) to maintain its higher-for-longer rate stance. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
The US CPI inflation data will take center stage on Tuesday. Analysts expect the headline CPI to decline by 0.1% MoM in June, while the core CPI is projected to show a rise of 0.3% during the same period. If the report shows a softer-than-expected outcome, this could weigh on the US dollar (USD) and support the USD-denominated commodity price in the near term.
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