Gold prices fell below $4,500 per ounce on Wednesday, moving closer to the March lows reached last week, as expectations grew that central banks may have to take a more hawkish stance and keep interest rates higher for longer. Sentiment was further pressured by ongoing uncertainty surrounding a potential US-Iran agreement to end the conflict. At the same time, oil prices extended their gains, amplifying concerns about renewed inflationary pressures.
In the United States, recent labor market data indicate an acceleration in employment growth, in line with earlier ADP and JOLTS reports. As a result, markets now anticipate that the ECB will raise borrowing costs next week, with traders also pricing in an additional 25-basis-point hike in September. Although gold is traditionally regarded as a hedge against inflation, it generally loses appeal as a non-yielding asset when interest rates remain elevated.
