Gold falls for 7th straight day as U.S.-Iran clashes fuel rate hike fears

Gold prices extended their losing streak on Wednesday, retreating for a seventh consecutive session as surging crude oil prices tied to renewed U.S.-Iran military hostilities stoked inflation concerns and bolstered expectations that the Federal Reserve will raise interest rates later this month.

Spot gold slipped toward $4,440 per ounce during early Asian trading, according to WAM via Qazinform, while Comex CME Group Inc. ↘ 0.44% gold futures for December fell $46.46, or 1.06%, to $4,349.94 per ounce in New York. On India's Multi Commodity Exchange, gold futures for October delivery dropped Rs 1,559, or 1.03%, to Rs 1,50,170 per 10 grams.qazinform+1

Escalation Reignites Energy Shock

The sell-off followed the largest exchange of fire between Washington and Tehran since July. Reuters Thomson Reuters Corporation ↘ 4.69% reported that U.S. forces struck Iran's southern coast while Iran fired at American bases across the region on Wednesday. The U.S. Central Command said the strikes followed attempted attacks by the Islamic Revolutionary Guard Corps against commercial shipping in the Strait of Hormuz and against American service members.money.rediff+1

Crude oil prices jumped in response, with WTI rising above $90 per barrel and Brent crude trading near $92. The Strait of Hormuz, through which roughly 20% of global oil supply passes daily, has been a flashpoint since the broader U.S.-Israel military campaign against Iran began in February.idahobusinessreview+4

Rate Hike Expectations Harden

The energy price spike has reinforced market bets that the Fed will tighten policy at its September 16 meeting. J.P. Morgan JPMorgan Chase & Co. ↘ 0.84% Wealth Management strategists have said they expect a 25-basis-point hike, with futures pricing implying roughly a 65% chance of an increase. A Forbes analysis argued the Fed is likely to move even after July's Consumer Price Index showed headline inflation cooling to 3.4% year-over-year, because core inflation remains sticky at 2.5%.chase+2

"Gold futures fell to their lowest level in more than three weeks, as the escalating conflict in West Asia lifted oil prices and stoked inflation and interest rate-hike fears," said Aamir Makda, an analyst at Choice Broking.money.rediff

Safe Haven Loses Its Edge

The dynamic marks an unusual turn for gold, which typically benefits from geopolitical turmoil. But the prospect of higher borrowing costs and rising bond yields has diminished the appeal of the non-yielding metal. Gold had earlier touched a two-month high near $4,449 in mid-August before reversing course. HSBC's ↘ 1.14% 2026 year-end target remains at $4,750 per ounce, though the bank trimmed its annual average forecast to $4,560.cnbc+1

Market participants are now watching Friday's U.S. employment data for further clues on the Fed's rate path ahead of its policy decision on September 16.money.rediff