Oil prices topping $100 and the looming rate hike double pressure! Gold price launches $4000 defense battle.

Noted that as the Middle East conflict escalated, putting more pressure on rising energy prices and raising expectations for the Federal Reserve to tighten monetary policy to curb inflation, the price of gold fell. After dropping 2% the previous day, spot gold prices hovered around $4050 per ounce, wiping out most of the gains from the two previous trading days, driven mainly by buying on dips. Following the breakdown of the ceasefire agreement signed last month, the war entered a new phase of escalation. President Trump threatened to increase strikes against Iran and said he would hold Iran responsible for any attacks by the Houthi rebels in Yemen in the Red Sea in the future. Benchmark Brent crude oil prices broke through the $100 per barrel mark for the first time since May, while the two-year US Treasury yield rose for the sixth consecutive day on Thursday. Gold prices are expected to rise slightly this week. Adding to the uncertainty, the US announced tariffs of 10% to 12.5% on imported goods from most major trading partners, alleging forced labor in their supply chains. This is the most extensive measure taken by Trump to restore his protectionist tariff regime since earlier tariff measures were overturned by the Supreme Court. Rising energy prices, coupled with a seemingly resilient US labor market, increase the likelihood of Fed rate hikes. Rising borrowing costs are a disadvantage for non-interest-bearing precious metals. Analysts at TD Securities, including Ryan McKay, stated in a report that with soaring energy prices and resurgent inflation concerns, fast money has quickly turned back into gold sellers. They added that for silver, breaking below $55.19 per ounce could trigger new selling. Swaps traders currently estimate a 34% probability of a hike at the Fed meeting next week. It is expected that there will be at least one rate hike in September, and a second hike may occur before the end of the year. Since late June, gold has been hovering around $4000, with some traders viewing this as a key support level. Since the US and Israel launched strikes against Iran in late February, the gold price has fallen by about a quarter; however, in the previous month, the gold price hit a near-historical high of nearly $5600, ending a bull market lasting for many years. At the time of writing, spot gold was basically flat at $4048.25 per ounce. Silver, after dropping 3.6% the previous trading day, remained steady at $57.62 per ounce. Platinum and palladium edged slightly lower. The Bloomberg Dollar Spot Index, after rising 0.3% on Thursday, fell slightly.