Gold dropped 2.7% on Tuesday as a stronger dollar, fueled by new U.S. strikes on Iranian targets and a global bond sell-off, pressured the metal. Oil prices jumped on the escalation, while traders weighed fresh labor-market data for clues on the Federal Reserve's next move.
Gold fell 2.7% to settle at $4,328.64 an ounce on Tuesday. Gold futures shed 2.4% to $4,375.75/oz. A stronger dollar drove the drop, lifted by a sharp escalation in U.S.-Iran tensions and a sell-off across global bond markets.
U.S. and Iran trade new strikes
U.S. Central Command said Tuesday it had launched strikes against Islamic Revolutionary Guard Corps targets, while Iranian state media said the attacks hit a factory in Qeshm and non-military targets in Hormozgan. Kinetic action had resumed on Sunday for the first time since July, after CENTCOM said it took limited, precise action against IRGC forces laying mines in the Strait of Hormuz. Iran then retaliated with strikes on U.S. military bases in Jordan, and Jordanian state media reported the interception and destruction of eight missiles. President Donald Trump said Tuesday's strikes responded to the minelaying attempt and the attack on the Jordan base.
Oil surges as tensions escalate
Oil prices, which had already gained on Monday, extended their advance sharply on Tuesday after the new U.S. strikes. Brent crude futures expiring in November rose 5.1% to $95.13 a barrel. U.S. West Texas Intermediate crude futures expiring in October topped $90 a barrel for the first time since June 11.
Bond sell-off deepens on inflation fears
Away from the Middle East, a sell-off in U.S. Treasury yields and other major bond markets picked up steam Tuesday on rising inflation and fiscal debt concerns. The benchmark U.S. 10-year yield hit its highest level since November 2023, while the 2-year yield reached its highest since July 2024. Expectations of a Federal rate hike in September have jumped since last week's hawkish signals from the Federal Reserve. Fed Chair Kevin Warsh delivered the message in a keynote address at the Jackson Hole Economic Policy Symposium on Friday.
Labor data keeps Fed bets steady
U.S. job openings in July came in at 7.271 million, below the expected 7.330 million but up from June's downwardly revised 7.182 million, according to the latest JOLTS report. Following the data, the CME FedWatch tool put the odds of a quarter-point September hike at about 68%, with a nearly 32% chance of the Fed holding steady, both little changed from the previous day. José Torres, senior economist at Interactive Brokers, said oil prices nearing $90 a barrel are "a heavy burden on the Treasury complex." Eyes now turn to Friday's U.S. August nonfarm payrolls report for further direction.
Source: Investing.com
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