Gold Plunges As Dollar Rises On Hawkish Fed, Fuel Crisis

(RTTNews) - Gold extended losses on Thursday after having hit a one-month low in the previous session on hawkish Fed comments.

Spot gold fell 2.2 percent to $4,712.50 an ounce while U.S. gold futures were down 3.7 percent at $4,713.34.

A stronger dollar exerted downward pressure on bullion as the U.S. Federal Reserve delivered a hawkish hold and escalating attacks on Persian Gulf oil-and-gas infrastructure sent oil prices soaring.

The dollar rose broadly while short-dated U.S. Treasury yields hit their highest level since last August after Federal Reserve Chair Jerome Powell struck a more hawkish tone on inflation and data showed inflation at the U.S. wholesale level unexpectedly accelerated last month to 3.4 percent.

After leaving interest rates unchanged, Powell said in his post-meeting press conference that the U.S. is seeing "some progress on inflation" but "not as much as we had hoped."

Fed officials' latest projections predicted a quarter point rate cut this year, but Powell warned that "you won't see the rate cut" if there isn't further progress on inflation because of the broader uncertainty linked to the Middle East conflict and President Trump's tariffs.

The implications of developments in the Middle East for the U.S. economy are uncertain," the Federal Open Market Committee said in a statement.

Brent crude prices jumped nearly 10 percent to reach $118 a barrel after Israel attacked upstream energy assets in Iran and the latter vowed retaliation, escalating attacks on Gulf energy infrastructure.

Iran has threatened to attack energy infrastructure across Saudi Arbia, the UAE and Qatar "in the coming hours" after missiles had targeted its gas facilities at the giant South Pars field, the largest gas reserves in the world.

The UAE temporarily suspended operations at the Habshan gas facilities due to falling debris from interceptions of missiles.

Qatar's Ras Laffan Industrial City, home to the world's biggest LNG export terminal, suffered significant damage following a missile strike.

Washington "knew nothing" of Israel's earlier attack on Iran's South Pars gas field, President Trump said and vowed that "NO MORE ATTACKS WILL BE MADE BY ISRAEL" if Tehran stops attacking Qatar.

But if Iran did not comply, the United States would "massively blow up the entirety of the South Pars Gas Field", Trump warned.

The attacks on critical energy infrastructure rattled markets already reeling from the effective closure of the Strait of Hormuz and the continued blocking of oil and gas exports from the Gulf region.