Gold sank toward $4,000 an ounce on Monday after President Trump announced a 20% levy on ships crossing the Strait of Hormuz, sending crude oil higher. The drop opens a week of US inflation data, testimony from new Fed chair Kevin Warsh, and bank earnings.
Gold fell hard on Monday, dropping near $4,000 per ounce as crude oil jumped and both the US-Iran and Russia-Ukraine wars intensified. The move came at the start of a busy week for US inflation data, central-bank policy, and corporate earnings.
The losses spread across sessions. Gold and silver for London delivery lost 1.8% and 3.6% respectively during Asian trading, though they held up better than in Shanghai, where China's benchmark bullion auctions fixed at their lowest prices since the start of the month. Gold for London settlement fell $75 to $4,045 in Asian trade, then sank another $40 mid-afternoon.
Trump's Hormuz levy lifts crude
The mid-afternoon drop followed Trump's move to revive a blockade of Iranian tanker traffic. He demanded a 20% levy on all cargo shipping through the Strait of Hormuz, a vital waterway now effectively shut by Iranian forces. Ukraine, meanwhile, said it had struck 105 'shadow fleet' tanker vessels over the past eight days.
Crude oil more than reversed the previous two sessions' retreat. September Brent futures neared their highest in over three weeks at $79.75 per barrel, some 13.6% above pre-Iran war levels.
Inflation data and Fed testimony ahead
Attention now turns to Tuesday's US inflation print. According to BullionVault: "Brent's gain now puts more of a focus on CPI this Tuesday", said MKS Pamp strategist Nicky Shiels. The same day brings the first regular testimony from new Federal Reserve chair Kevin Warsh before the House Financial Services Committee.
Any perceived dovish lean from Warsh could push gold back toward $4,200 resistance, Shiels said, while a reaffirmed hawkish tilt, probably his base case, keeps a $4,000 retest alive. Silver held firmer than gold through the session, dipping only beneath $58 per troy ounce. For context on what has been driving the metal lower, see why the price of gold is dropping.
Source: BullionVault
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