Introduction 1 - Gold nears 7-month low due to rising Treasury yields and interest rate hike expectations
To update prices and add details
July 1 (Reuters) - Gold prices fell 1 percent on Wednesday and hovered near a seven-month low hit in the previous session, pressured by rising Treasury yields, while fading prospects of a lasting peace deal between the United States and Iran kept worries about inflation and the Federal Reserve's interest rate hikes alive.
Gold prices fell 1.1 percent to $3,964.97 an ounce in spot trading by 0612 GMT. In the previous session, gold prices dropped to $3,942.99 an ounce, their lowest level since last November.
U.S. gold futures for August delivery fell 1.5 percent to $3,977.70 today.
Gold recorded its biggest quarterly drop since 2013 yesterday, and fell for the fourth consecutive month in June, after tensions in the Middle East fueled inflation fears and boosted expectations of a US interest rate hike.
Ilya Spivak, head of global macroeconomics at Tasty Life, said, "The pressure from rising bond yields is apparently what's driving gold lower. The US dollar has risen slightly at the same time, which kind of confirms what's going on."
The dollar rose, making gold, which is priced in US dollars, more expensive for holders of other currencies, and benchmark 10-year US Treasury yields also climbed.
The CME Group’s FedWatch tool indicates that traders expect a probability of nearly 67 percent for an interest rate hike in September, reflecting growing expectations of tighter monetary policy.
Investors are awaiting ADP's June employment data later today and Thursday's non-farm payrolls figures for further clues about the Federal Reserve's interest rate path, which could shape near-term gold trends.
Oil prices rose after Iran announced it would not meet with the US envoys who headed to the region following renewed fighting, weakening prospects for near-term diplomatic progress.
As for other precious metals, silver fell 2.1 percent to $57.34 an ounce in spot trading, platinum dropped 1.1 percent to $1,534.32, its lowest level since last November, and palladium declined 1.2 percent to $1,189.69.