Gold slides over 3% as Middle East tensions stoke inflation fears

FUNDAMENTALS

* Spot gold was down 3.3% at $4,340.09 per ounce, as of 0100 GMT, extending losses for a ninth consecutive session. The metal, ‌which fell ⁠on ⁠Monday to its lowest level since January 2, lost more than 10% last week.

* U.S. gold futures for April delivery fell 5% to $4,347.

* Escalating the three-week-old war, Iran said on Sunday it would strike the energy and water systems of its Gulf neighbours in retaliation if U.S. President Donald Trump follows through with a threat delivered a day ⁠earlier to ‌hit Iran’s electricity grid in 48 hours.

Live Events

* Iran’s Revolutionary Guards said if Iranian power plants are attacked, the Strait of Hormuz ⁠will be completely closed and will not be opened until the destroyed power plants are rebuilt.
* Oil prices stayed above $110 a barrel, as investors weighed U.S. and Iranian threats to target energy facilities that could escalate the war against the release of millions of barrels of Iranian oil at sea to global markets.
* The closure of the Strait of Hormuz kept crude ‌elevated, stoking inflation through higher transport and manufacturing costs. While rising inflation typically boosts gold’s appeal as a hedge, high interest rates curb demand for the ⁠non-yielding asset.
* Meanwhile, market pricing for a U.S. Federal Reserve interest rate hike this year has shot up, and is now seen as far more likely than a rate cut, as interest rate futures were pricing around a 27% chance of a rate hike by December, as per the CME FedWatch tool.

* Spot silver lost 3.3% to $65.55 per ounce. Spot platinum fell 4.4% to $1,838.45 and palladium was down 0.4% at $1,398.50.

DATA/EVENTS (GMT)

1500 EU Consumer Confid. Flash March.