FX.co ★ Gold Holds Losses on Inflation Worries

Gold traded below $4,500 per ounce on Tuesday, extending losses from the previous session as stalled peace talks between the United States and Iran kept inflation risks and interest rate expectations in focus. On Monday, Iranian media reported that Tehran had halted communications with Washington in response to Israeli strikes in Lebanon.

Nevertheless, President Donald Trump said discussions were still underway and indicated that a memorandum of understanding with Iran to reopen the Strait of Hormuz could be finalized as soon as next week.

In the meantime, markets are pricing in a Federal Reserve rate hike before year-end after US inflation accelerated, largely attributed to the ongoing conflict in the Middle East. Investors are now looking ahead to this week’s US monthly jobs report and remarks from Fed officials for further guidance on the future course of monetary policy.