Gold Falls to Three-Week Low

Gold fell today, Wednesday, to its lowest level in more than three weeks, as rising tensions in the Middle East pushed oil prices higher and raised concerns about inflation and interest rates, while investors await U.S. jobs data.

The United States launched a series of air strikes on Iran yesterday, Tuesday, and Tehran responded with attacks, marking the most severe escalation between the two sides in weeks. Oil prices rose for the third session in a row, coinciding with a rise in U.S. Treasury yields.

"The return of higher oil prices after renewed tensions between the United States and Iran has increased inflation worries," said Bass Quijman, CEO and Asset Manager at D.H.F. Capital S.A.

The CME Group’s FedWatch tool shows that market participants currently assign a 67% probability of a rate hike at this month’s Federal Reserve meeting.

"If inflation does not fall quickly, the time will come to raise rates," said Michael Barr, a Federal Reserve Board member. He also noted that last week, Fed Chair Jerome Powell signaled a possible rate increase.

Quijman added, "Weaker data could ease pressure on gold, while stronger data or more hawkish Fed statements could extend the decline."