Gold prices fell for a second consecutive session on Tuesday as the United States dollar ticked higher amid renewed geopolitical tensions, and investors turned their attention to the minutes from the Federal Reserve's June policy meeting.
By 3:50 pm AEST (5:50 am GMT), spot gold was down 1.0% at US$4,122.67 an ounce, extending losses after failing to hold above the US$4,100 level.
The U.S. dollar found support as risk aversion returned to financial markets following reported attacks on commercial vessels in the Strait of Hormuz and a sharp sell-off across Asian semiconductor stocks, reducing demand for the dollar-denominated precious metal.
Late Monday, Axios, citing two U.S. officials, reported that Iran fired at least two missiles at commercial ships transiting the Strait of Hormuz.
The reported attacks have raised concerns that tensions between the United States and Iran could escalate again, threatening the fragile ceasefire and weighing on broader market sentiment.
Investors are now looking ahead to the minutes of the Federal Reserve's June monetary policy meeting, due on Wednesday (Thursday AEST), for further clues on the outlook for U.S. interest rates.
Expectations for a near-term rate increase have eased following a run of softer-than-expected U.S. economic data.
The Institute for Supply Management (ISM) said on Monday its Services Purchasing Managers' Index (PMI) slipped to 54.0 in June from 54.5 in May, indicating the services sector continued to expand, albeit at a slower pace.
Last Thursday's U.S. employment report also disappointed, with nonfarm payrolls increasing by just 57,000 in June, well below forecasts for a gain of 110,000.
The labour force participation rate also fell to 61.5%, its lowest level in five years.
According to the CME Group FedWatch Tool, markets are now pricing in a 56.8% probability of a September Federal Reserve rate hike, down from 67.8% a week ago.
