07.06.202623:52:32UTC+00Gold Holds Decline on Middle East Concerns

Gold hovered near $4,300 an ounce on Monday after slumping almost 5% last week to its lowest level in more than two months. The decline came as renewed tensions in the Middle East pushed oil prices higher, stoking concerns about inflation and the outlook for interest rates.

Iran launched several rounds of missiles toward Israel as a warning against further military action in Lebanon. Israel’s military reported that all projectiles were intercepted and that there were no casualties. Even so, the protracted conflict and the ongoing near-closure of the Strait of Hormuz have disrupted energy flows from the Persian Gulf, underpinning higher oil prices and amplifying inflation worries.

At the same time, stronger-than-expected US employment data pressured bullion last week by strengthening expectations that the Federal Reserve could raise interest rates later this year. Futures markets are now assigning roughly a 70% probability to a Fed rate hike in December, up from about 50% before the release of the jobs report.