Gold continued to decline during Thursday’s trading, pressured by a stronger dollar and renewed inflation concerns as military tensions between the United States and Iran escalated. Pressure on the yellow metal came from two main factors: higher oil prices and the inflation risks they carry, and expectations that US interest rates could remain elevated for a longer period.
Spot gold fell to $4,070.81 an ounce, while gold futures declined to $4,079.47, extending losses for the third consecutive session. Although the Federal Reserve meeting minutes showed a split among policymakers over whether interest rates should be raised this year, they failed to provide enough support for gold, especially as markets remained focused on energy driven inflation.
The dollar benefited from this environment, as investors viewed the rise in oil prices as a factor that could complicate the Federal Reserve’s task of bringing inflation back to its 2% target. The stronger the market belief that interest rates may stay high for longer, the greater the pressure on gold, which does not generate yield.
Comments from ANZ analysts reflected this view, as they noted that any recovery in energy prices would strengthen expectations that the Federal Reserve may keep monetary policy tight to fight persistent inflation. The escalation between Washington and Tehran also increased market sensitivity, after President Donald Trump said the ceasefire was over amid tensions linked to attacks on vessels in the Strait of Hormuz.
In precious metals, performance remained generally weak. Silver fell to $58.0060 an ounce, while platinum recorded a limited rise to $1,594.0, reflecting a cautious tone across the sector as the dollar stayed firm.
On the other side, oil prices moved higher after the United States carried out fresh strikes on Iran, lifting Brent crude to $78.88 a barrel and West Texas Intermediate to $74.37. The move was driven by weaker confidence in the fragile ceasefire and rising concerns over shipping activity in the Strait of Hormuz.
These developments are especially important because the Strait of Hormuz is a key route for global oil and liquefied natural gas flows. Any threat to shipping activity in this passage quickly feeds into energy prices, even if there is no broad physical disruption to supply.
US strikes targeted around 90 Iranian military sites, while Iran responded by attacking US military sites in Bahrain and Kuwait. This placed the market in a more tense phase, where prices are no longer driven only by supply and demand, but also by a clear geopolitical risk premium.
Despite the interim agreement between Washington and Tehran, uncertainty remains high and keeps the market exposed to sharp volatility. With some institutions expecting Iran to extend negotiations, the war risk premium in oil prices may remain present for several months, even if the broader medium term outlook for oil remains vulnerable to pressure if risks ease or supply flows improve.
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