Gold fell more than 1% to $4,050 an ounce on Wednesday, its lowest since July 2, after US President Donald Trump declared an interim peace deal with Iran "over," sending oil prices up over 5% and fueling fears of inflation and higher US interest rates.
At NATO’s Ankara summit, Trump stated that the June memorandum of understanding with Iran was finished and that he had no intention of engaging with Tehran.
The price surge followed Iran’s Revolutionary Guards’ announcement that they had targeted US military bases in Bahrain and Kuwait in retaliation for US strikes on Iran and the revocation of its oil sales license.
Markets now see a 66% chance of a US rate hike in September, up from 62% on Tuesday.
Meanwhile, China’s central bank reported its largest monthly increase in gold reserves in over two and a half years in June.
Investors are now awaiting the Federal Reserve’s June meeting minutes, due later today, for further monetary policy signals.