Gold prices dropped to their lowest level in three weeks due to a sharp rise in oil prices and uncertainty surrounding major central banks' decisions, reports Todayinfo.
On Tuesday, spot gold fell 1.4% to $4,614.71 per ounce, the lowest since April 7. US gold futures for June delivery also lost 1.4%, settling at $4,629.20.
According to Julius Baer analyst Carsten Menke, the decline in gold and silver prices reflects rising oil prices due to stalled US-Iran talks. US President Donald Trump was dissatisfied with Iran's latest proposal, reducing hopes for a quick resolution to the two-month military conflict.
Brent crude oil surpassed $110 per barrel as the strategic Strait of Hormuz remains effectively closed. Menke noted that the gold market is more concerned about the risk of monetary tightening due to the war than about slowing global economic growth. High interest rates make gold less attractive as it yields no income.
The Bank of Japan kept rates unchanged, but three of nine board members voted for a hike. The US Federal Reserve is also expected to hold rates steady. Investors are watching decisions from the European Central Bank, Bank of England, and Bank of Canada.
A stronger dollar and a three-week high in 10-year US Treasury yields added pressure on gold. Other precious metals also declined: silver fell 3% to $73.20, platinum lost 1.7% to $1,949.84, and palladium dropped 2.2%.
