Gold prices edged higher on Wednesday after hitting a near one-week low earlier in the session, supported by renewed safe-haven demand following fresh geopolitical tensions in the Middle East. However, a stronger US dollar and higher Treasury yields capped gains.
Spot gold rose 0.4 per cent to USD 4,123.55 per ounce by 0731 GMT after falling to its lowest level since July 2 earlier in the day. US gold futures for August delivery were down 0.5 per cent at USD 4,135 per ounce.
Market sentiment turned cautious after Iran's Revolutionary Guards said they had targeted US military sites in Bahrain and Kuwait. The development followed US strikes on Iran, the revocation of a licence allowing Iranian oil exports, and reports of attacks on three tankers in the Strait of Hormuz.
The escalation lifted crude oil prices by more than 3 per cent, fuelling concerns that higher energy costs could add to inflationary pressures.
Meanwhile, the US dollar climbed to its highest level in a week and Treasury yields advanced as investors raised expectations of a US interest rate increase in September. Market participants are now awaiting the minutes of the Federal Reserve's June policy meeting for further clarity on the central bank's rate outlook.
Gold, which is typically sought during periods of geopolitical uncertainty, tends to face pressure when interest rate expectations rise because higher yields increase the opportunity cost of holding non-yielding assets.
Among other precious metals, spot silver gained 1.1 per cent to USD 60.69 per ounce, while platinum fell 0.9 per cent to USD 1,626.44 and palladium declined 1.1 per cent to USD 1,263.55 per ounce. |
