Gold cracked below $4,200 Wednesday for the first time since December, sliding to $4,156.39 as overnight military exchanges between the U.S. and Iran collided with anxiety over inflation as May’s inflation hit a three year high at 4.2%.
The spot market opened the session at $4,253.00, already down 0.2% from Tuesday’s close and 1.8% below Tuesday’s open. By 10:33 a.m. ET, the contract had extended losses to $4,156.39.
The move deepens a brutal June, during which gold has shed roughly 8% after opening the month near $4,575.
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Rate hike expectations are at the center of the selloff, with FedWatch now expecting a rate hike to occur in December of this year.
The prior week’s jobs report poured fuel on that concern. The Bureau of Labor Statistics reported the U.S. added 172,000 nonfarm jobs in May while unemployment held at 4.3%. Bart Melek, global head of commodity strategy at TD Securities, said the “implication for gold here is that the cost of carry is getting quite high.”
Gold’s one-year gain, which stood at 95.6% on January 29, has now contracted to 25.1%, near its lowest level in over a year.
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