Major drop in gold prices in global markets amid Middle East tensions

According to a report by Reuters news agency, as of 9:26 AM (GMT) on Thursday (July 16), the spot market price of gold fell by 1.5 percent to $4,010.17 per ounce. Earlier in the day, the decline had reached nearly 2 percent.

Meanwhile, during the same period, US gold futures rose by 1.1 percent to trade at $4,005.20 per ounce.

According to analysts, concerns over global fuel supply increased after news emerged of Iran's directive to Yemen's Houthis to prepare for the closure of the Bab el-Mandeb Strait, a crucial oil shipping route in the Red Sea, amid potential US strikes on Iran's power infrastructure. This caused crude oil prices to rise by more than 1 percent.

The rise in oil prices is feared to increase global inflationary pressures. In this situation, the market has developed the perception that the Fed may raise interest rates further or keep them high for an extended period to control inflation. As a result, many investors consider investing in bonds more profitable than gold, as gold does not yield regular interest or returns.

According to data from the CME FedWatch Tool, market participants see about a 51 percent probability that the Fed may raise interest rates in September. Meanwhile, Fed Chairman Kevin Warsh indicated a tough stance on controlling inflation this week but did not provide any specific policy guidance on the matter.

Analysts also say that since gold is traded in US dollars in international markets, a stronger dollar makes gold purchases more expensive for buyers in other countries, leading to a tendency for reduced gold demand.

Along with gold, prices of other precious metals have also fallen. In the spot market, silver prices dropped by 2.8 percent to $56.17 per ounce. Platinum prices fell by 0.9 percent to $1,658.65, and palladium prices declined by 2.7 percent to $1,279.25 per ounce.