The global spot gold price fell by 73 USD to 4,015 USD per ounce at the close of trading on 29/6. By the morning of 30/6, the price continued its decline, reaching 3,992 USD.

Global spot gold price reversed its trend and declined from the beginning of this week. Chart: Kitco

Gold prices fell due to renewed US-Iran tensions over the past few days, which have simultaneously driven up oil prices and fueled concerns about inflation and rising interest rates. Peter Grant, Vice President of Zaner Metals, explained, "The market is closely monitoring news from the Middle East as tensions flared over the weekend. Prices are also continuing to adjust as the Federal Reserve (Fed) leans towards a more hawkish stance."

Last week, global gold prices also dipped below the 4,000 USD mark, hitting a 7-month low at one point. Compared to its peak in January, the price has now lost nearly 1,600 USD per ounce.

The geopolitical situation escalated on 28/6 when Iran launched ballistic missiles and unmanned aerial vehicles targeting US military bases in Kuwait and Bahrain. This action was a direct response to earlier US airstrikes on several coastal facilities in Sirik and Qeshm island.

Following these attacks, global crude oil prices surged. WTI and Brent oil are currently trading around 70-73 USD per barrel.

While gold is traditionally considered a hedge against risk, the high energy prices resulting from the conflict are paradoxically raising concerns about inflation and increasing interest rates. This environment is unfavorable for non-yielding assets like gold.

At its meeting this month, the Federal Reserve maintained its benchmark interest rate. However, officials anticipate one rate hike this year, driven by persistent concerns that US inflation remains above the 2% target.

Further impacting gold, the Dollar Index is on track for its strongest monthly gain in nearly a year. A stronger dollar makes gold more expensive for buyers outside the US, reducing demand.

Investors are now awaiting the US jobs report this week, which will provide further insight into the Fed's monetary policy outlook. Grant predicted, "Gold could hit new lows if strong job data reinforces the Fed's 'higher-for-longer' interest rate view,". Currently, investors are pricing in a 63% probability of a Fed rate hike in September.

Ha Thu (according to Reuters, Kitco)