Gold fell more than 1% on fears of the Strait of Hormuz closure

Gold fell more than 1% in early Asian trade on Monday, as concerns over the closure of the Strait of Hormuz boosted oil prices, reviving expectations of higher interest rates to counter inflationary pressures.

Fundamentals

Spot gold was down 1.2% at $4,072.78 an ounce by 0050 GMT. US gold futures for August delivery were down 0.8% at $4,081.70.

The US And Iranian forces have exchanged heavy missile and drone strikes, with Tehran targeting US facilities across the Gulf states on Sunday and saying it has again closed the vital Strait of Hormuz.

Oil prices in Asia jumped nearly 4%, the dollar rose and stock markets tumbled as fighting in the Gulf intensified.

Kevin Warsh’s first half-year testimony before Congress as Federal Reserve chairman, along with a slate of key US economic data including June CPI, PPI and retail sales, will be closely watched this week for new signals on the economy, inflation and monetary policy outlook.

The US Inflation “accelerated further this spring” as the growing impact of tariffs, war-related increases in energy costs and the buildout of artificial intelligence from the boom added to price pressures that took root last year, the Fed said in a monetary policy report to Congress on Friday.

COMEX gold speculators trimmed net long positions by 1,964 contracts to 114,854 in the week to July 7, data showed on Friday.

Gold traded at a broad discount in India last week as price volatility weighed on it, while demand in China remained steady and the country’s central bank reported the biggest monthly increase in gold reserves in 2-1/2 years in June.

Burkina Faso has granted an industrial mining permit to state-owned miner SOPAMIB for the Boubulo gold project, according to a statement.

Elsewhere, spot silver fell 1.6% to $58.89 an ounce, platinum fell 1.1% to $1,610.22 and palladium fell 1.3% to $1,260.15.