Global gold prices fell sharply below US$4,000 an ounce as escalating conflict in the Middle East drove oil prices higher and strengthened expectations that the US Federal Reserve may need to raise interest rates.
Spot gold dropped 3% to US$3,996.76 an ounce at 1.40pm Eastern Time on Monday, marking a second consecutive session of losses. The metal touched its lowest level since July 1 and recorded its largest one-day decline in more than two weeks.
US gold futures settled 2.6% lower at US$4,005.70 an ounce.
The sell-off followed US President Donald Trump’s announcement that Washington was reinstating a naval blockade against Iran after Tehran claimed to have closed the Strait of Hormuz.
Oil prices initially jumped about 5% following the announcement, raising concerns that higher energy and transport costs would place renewed upward pressure on inflation.
