Gold Falls 1% Amid Dollar, Oil Spike
Spot gold slipped 1.4% to settle at $4,108.56 per ounce, while gold futures fell 1.2% to $4,116.70 per ounce. The decline came as the U.S. dollar strengthened, with the dollar index up 0.34%, and oil prices spiked, with Brent crude up 2.28% and overall oil prices rising more than 5% amid heightened Middle‑East tensions. Reuters noted that bullion had recorded its worst quarter in 13 years last week.
Deutsche Bank analyst Henry Allen commented that gold has sold off this year despite inflationary pressures and geopolitical risk, suggesting higher real yields may be the primary driver, a factor that has not similarly impacted equities or credit.
The U.S. Treasury Department’s Office of Foreign Assets Control revoked the general license that had authorized the production, delivery, and sale of Iranian crude oil, petrochemical, and petroleum products. The revocation followed reports of attacks on three oil tankers in the Strait of Hormuz: two struck by unknown projectiles and a third hit by a drone, according to the United Kingdom Maritime Trade Operations (UKMTO). The UKMTO raised the regional threat level from “substantial” to “severe.”
Qatar identified one of the vessels, the Al‑Rekayyat, and held Iran fully responsible, while Saudi Arabia named another vessel, the Saudi tanker Vijian, and also condemned the attack. Although Iran has not publicly claimed responsibility, U.S. officials cited Iranian military fire on the three commercial ships. Iran has previously warned that vessels must use routes approved by Tehran and avoid a temporary shipping corridor set up by Oman and the International Maritime Organization.
The escalation threatens to destabilise the recently signed interim peace deal between Washington and Tehran, which had ended hostilities on all fronts and reopened the strait. Earlier tensions in late June saw Iranian attacks on ships that prompted U.S. retaliatory airstrikes.
On the monetary‑policy front, traders focused on the Federal Reserve’s June meeting minutes for clues. A softer‑than‑expected June jobs report had earlier helped the dollar post its worst day since April, while gold briefly rallied. New Fed Chair Kevin Warsh, appointed last month, signalled a shift away from forward guidance, emphasizing a sole focus on combating inflation. In public comments in Portugal, Warsh reiterated the stance, noting that inflation risks had receded. The minutes, to be released on Wednesday, are expected to reveal that half of the policymakers believed further rate hikes could be warranted this year.
Ambar Warrick and Scott Kanowsky contributed to the article.