Gold hits over 3-week low as MidEast tensions fan rate-hike fears

According to Business Recorder, bullion dropped on Wednesday to its weakest point in over three weeks, as conflict in the Middle East drove oil higher and fed worries about rising inflation and possible rate increases. Spot gold declined 0.6% to $4,304.01 an ounce by 0017 GMT, the lowest since August 7. The metal was heading for a fourth consecutive daily loss and remained beneath its 200-day moving average, a technical marker that traders monitor closely.

The latest escalation followed US airstrikes on Iran on Tuesday, which prompted retaliation from Tehran and marked the most serious flare-up in weeks. Crude has now advanced for three sessions in a row, and US Treasury yields moved higher as well. Bas Kooijman of DHF Capital S.A. said costlier oil could keep expectations for tighter monetary policy alive and push yields up, which would cap any gold rebound.

Market odds, as measured by the CME FedWatch Tool, stand at 67% for a Federal Reserve rate increase at its meeting later this month. Governor Michael Barr said the central bank should lift rates if inflation does not ease quickly, and Fed Chairman Kevin Warsh recently signaled openness to a hike. Silver fell 1% to $63.60 an ounce, platinum slipped 1% to $1,722.23 and palladium dropped 1.4% to $1,292.21, while attention turns to the ADP report later Wednesday and nonfarm payrolls on Friday.