Gold steady

Gold prices were little changed on Monday as investors assessed an escalation in the Middle East war that pushed oil prices higher.

Another US Federal Reserve policymaker signalled that interest rate hikes may be needed to curb inflation.

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Spot gold was steady at $4,018.19 per ounce, as of 0756 GMT. US gold futures for August delivery gained 0.1 percent to $4,023.

Oil prices jumped more than 3 percent after US forces struck Iran for a ninth consecutive day on Monday.

This came as the number of confirmed American military deaths in the renewed fighting rose to three.

Concals also grew over shipping through the Strait of Hormuz. The war is still ongoing, with a focus on rising oil prices that could lead to higher inflation, which is keeping gold pressured, said GoldSilver Central Managing Director Brian Lan.

However, $4,000 has been an important level, and shows that there is support for the metal when it falls below that mark.

Elevated oil prices stoke inflation fears and bets of higher-for-longer interest rates.

While gold is typically seen as an inflation hedge, high interest rates increase the opportunity cost of holding the non-yielding asset.

Cleveland Fed President Beth Hammack added her voice to a growing chorus of policymakers arguing interest rates may need to rise.

This is to beat back persistent inflation, setting up a charged debate at the Fed’s next meeting on July 29.

Traders are now pricing an 82 percent chance of a December interest-rate hike, versus 73 percent last week, according to the CME FedWatch tool.

In the longer term, I’m more cautious on gold and looking at the key $3,886 level, said Kelvin Wong, a senior market analyst at OANDA.

If that level is taken out on the downside, it could potentially unleash further weakness towards $3,500, Wong added.