FX.co ★ Gold Drops Over 1% on Trump's Comments

Gold dropped more than 1% to $4,050 an ounce on Wednesday, its lowest level since July 2, after US President Donald Trump declared that an interim peace deal with Iran was “over.” The announcement drove oil prices up more than 5% and stoked concerns about inflation and the prospect of higher US interest rates. Speaking at NATO’s Ankara summit, Trump said the June memorandum of understanding with Iran was no longer in effect and that he had no intention of engaging with Tehran. The move came after Iran’s Revolutionary Guards said they had struck US military bases in Bahrain and Kuwait in retaliation for US attacks on Iran and the cancellation of its oil export license. Money markets now assign a 66% probability to a US rate hike in September, up from 62% on Tuesday. At the same time, China’s central bank reported in June its largest monthly increase in gold reserves in more than two and a half years. Investors are now awaiting the release of the Federal Reserve’s June meeting minutes later today for further clues on the monetary policy outlook.