FX.co ★ AB2 | XAU/USD, GOLD

XAU/USD

Fears of continuously high inflation cause the price of gold to plummet to around $4,030.Following a drone strike on the Basra facility, Iraq suspends the loading of oil from all of its terminals.President Trump of the United States threatens to destroy Iranian infrastructure.During Thursday's European trading session, the price of gold (XAU/USD) dropped 0.7% to about $4,030. In the wake of growing military aggressiveness between the United States (US) and Iran, the precious metal is under pressure to be sold as worries about global inflation persist amid high oil costs.All petroleum loading on Iraqi ports has been suspended since a drone crashed into an oil ship at the country's Basra terminal throughout the day. This has rekindled concerns about a reduced supply of oil, which would keep energy prices high.Fears of restrictive monetary conditions by central banks are sparked by the possibility of increased energy costs de-anchoring global inflation expectations. In theory, larger expectations for interest rate hikes are bad news for non-yielding assets like gold.In an interview with Fox News on Wednesday, US President Donald Trump threatened to authorize forces to attack Iranian infrastructure, most likely next week, if the country doesn't return to the negotiating table, potentially escalating the war between the US and Iran.In the meanwhile, the decline in the price of gold is probably going to be constrained by less aggressive Fed forecasts. As US consumer and producer inflation has decreased in June, traders have lowered their expectations that the Fed would raise interest rates.The likelihood that the Fed will raise interest rates at its July meeting has decreased from 24.6% a week ago to 10.2%, according to the CME FedWatch tool.