FX.co ★ Gold Heads for Sharp Monthly Decline

Gold traded steadily near $4,500 per ounce on Tuesday but remained on track for a monthly decline of about 15%, its weakest showing since October 2008. The metal has come under sustained pressure this month from an oil-driven inflation shock, which has pushed investors and policymakers toward a more hawkish outlook on interest rates. The conflict in the Middle East has now entered its fifth week with no sign of de-escalation, as Iran has effectively closed the Strait of Hormuz and threatened to disrupt shipping in the Red Sea as well. At the same time, Federal Reserve Chair Jerome Powell noted that long-term US inflation expectations appear to remain anchored despite the heightened uncertainty stemming from the conflict. He added that the Fed’s current policy stance is well positioned to give officials room to evaluate the economic fallout from the war in Iran.