BENGALURU (Aug 31): Gold slipped on Monday as renewed Middle East attacks stoked inflation worries and strengthened bets on higher US interest rates after hawkish comments from Federal Reserve (Fed) chair, but bullion was still on track for its biggest monthly rise since January.
Spot gold fell 0.4% to US$4,436.04 per ounce by 0835 GMT, having touched its lowest level since Aug 19 earlier. US gold futures for December delivery dropped 1% to US$4,486.40.
"Gold remains under pressure following Kevin Warsh’s hawkish address on Friday, while renewed US-Iran tensions are adding to inflation concerns, increasing expectations of a Fed rate hike before the end of the year," ActivTrades senior analyst Ricardo Evangelista said.
Gold declined over 3% on Friday, in its biggest one-day fall since June 10, after Fed Chair Kevin Wars, at the Jackson Hole symposium said the US central bank will "have work to do" if policymakers were not confident inflation was returning to its 2% target.
Traders have ramped up September rate hike bets to 60%, up from roughly 36% prior to Warsh's comments, as per the CME FedWatch Tool.
Bullion is still up more than 10% this month, the most since January, after climbing to an over three-month high of US$4,696.18/oz last week on the US Treasury's recent announcement to double liquidity support buybacks of longer-dated bonds, stoking currency debasement fears.
"A return above US$4,600 would probably require a weak US labour report and an easing of tensions in the Persian Gulf, allowing Treasury yields and the US dollar to soften," Evangelista said.
The US ADP employment report and the nonfarm payrolls data are due later this week.
Oil prices were trading nearly 2% higher on Monday after the US attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran.
Elsewhere, spot silver rose 1% to US$66.99 per ounce, and is up over 16% this month after hitting its highest since mid-June on Friday.
Platinum slipped 1.1% to US$1,799.89, and palladium slid 1.3% to US$1,403.92. Both metals were headed for their biggest monthly rise since December.
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