- Brent oil rises over 2%
- US launched fresh strikes on Iran on Monday
- US Secretary of State says Iran deal could "take a few days"
May 26 (Reuters) - Gold fell on Tuesday as fresh U.S. attacks in Iran pushed oil prices higher, fuelling concerns around inflation and higher-for-longer interest rates.
Spot gold was down 0.9% at $4,529.50 per ounce, as of 0545 GMT. U.S. gold futures for June delivery gained 0.2% to $4,529.60.
U.S. Secretary of State Marco Rubio said negotiating a deal with Iran could "take a few days," quashing hopes for an imminent end to the conflict a day after U.S. forces conducted what Washington called defensive strikes in southern Iran.
"Even though we have a peace deal that is being done and dusted between the U.S. and Iran, the damage that has been done to Middle East oil production facilities could actually prevent a rapid normalisation of oil flows flowing into the rest of the world from the Middle East," said Kelvin Wong, a senior market analyst at OANDA.
"The market has started to price in this situation, showing very high odds of an interest rate hike to come in this year."
Brent crude futures rose 2% in Asian trade on Tuesday, as a deal to end the war and open up the Strait of Hormuz remained elusive.
Elevated crude oil prices can fuel inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.
Markets are pricing in a U.S. Federal Reserve rate hike before year-end, with a 56% chance of a move by December, according to CME Group's FedWatch tool. FEDWATCH
Spot silver fell 2.1% to $76.45 per ounce, platinum lost 1% to $1,948.12, and palladium slid 1.4% to $1,378.89.
Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich
Source: Reuters