Gold prices remained under pressure on Tuesday as traders assessed tensions in the Middle East. Investors also turned their attention to key US labor-market data due later this week.
The new economic reports could influence expectations for the US Federal Reserve’s monetary policy and future interest-rate decisions.
After Asian markets opened on Tuesday, spot gold fell 0.3% to around $4,437 per ounce. The decline followed Monday’s drop, which pushed gold to its lowest level since August 19.
Meanwhile, gold futures for December delivery rose 0.1% to $4,485 per ounce.
Investors are closely watching several US economic reports this week. These include private-sector employment data and the government’s labor-market report. The figures could provide fresh information about employment conditions and influence expectations for interest rates.
Gold reached its highest level in three months last week. However, prices fell more than 3% on Friday after Kevin Warsh made hawkish comments about inflation and interest rates.
Warsh said the Federal Reserve still has significant work ahead if inflation moves further away from its 2% target.
Tony Sycamore, a financial markets analyst at IG, said Warsh’s comments at the Jackson Hole conference have put pressure on gold. He also pointed to rising tensions around the Strait of Hormuz.
According to Sycamore, the latest tensions have pushed oil prices higher. Higher oil prices could also increase inflation expectations and create additional pressure on gold.
Sycamore said one interest-rate increase alone may not cause a major change in gold prices. However, two or three rate increases could have a stronger impact.
According to the CME FedWatch tool, traders now see a 66% probability of a US rate increase in September. They also see an 89% probability of a rate increase in December.
US President Donald Trump told reporters at the White House that he has great respect for Warsh. Trump added that Warsh would do what he believes necessary regarding interest rates.
At the same time, Trump threatened further military action against Iran on Monday. The warning adds to uncertainty in global markets and could continue to influence oil and gold prices.
