Ammon News - Gold prices ‌fell on Tuesday after hitting a more than two-month high earlier in the session, as fading hopes for a U.S.-Iran peace deal lifted oil prices and fuelled concerns that inflation and interest ​rates could remain elevated.

Spot gold was down 0.4% to $4,371.92 per ounce by 0855 ​GMT, after hitting its highest level since June 5 earlier at $4,434.84.

U.S. ⁠gold futures rose 0.3% to $4,430.80.

Yields on the benchmark 10-year U.S. Treasury note rose ​to an over one-week high, increasing the opportunity cost of holding bullion.

"The rise in ​oil prices has provided a boost to U.S. Treasury yields, which is weighing on gold prices," said Hamad Hussain, a climate and commodities economist at Capital Economics.

Oil prices rose after U.S. President Donald Trump ​responded to Iran's conditions for a peace deal by demanding that Tehran pay ​compensation for people killed in wars, attacks and protests. The comments added to uncertainty over efforts ‌to reopen ⁠the Strait of Hormuz.

Higher oil prices could add to inflation pressures and keep interest rates elevated, making non-yielding gold less attractive.

Traders are currently pricing a 52% chance of an interest-rate hike in September, up from 44% on Monday, according to the CME ​FedWatch Tool. FEDWATCH
Cleveland Federal ​Reserve Bank President Beth ⁠Hammack said on Monday she believed the time was right to begin raising interest rates gradually so as to avoid the need ​for sharper increases later.

Investors are now awaiting U.S. consumer price ​data due ⁠on Wednesday and producer price data on Thursday for further clues on the Fed's policy outlook.
"A hotter-than-expected inflation print could justify the case for an interest rate hike at ⁠the Fed's ​next meeting and, as a result, put further ​downward pressure on gold prices," Hussain added.

Among other metals, spot silver fell 1.5% to $64.74, platinum gained 0.4% to $1,760.15 ​and palladium declined 0.4% to $1,377.81.


Reuters