Gold Hits Two-Month Low, US-Iran Attacks and Strong Dollar Pressure Bullion
Gold prices fell to a two-month low as the latest clash between the US and Iran raised the risk of a breakdown in peace talks while maintaining inflation concerns. A stronger dollar added to the pressure, making gold more expensive for many buyers outside the US.
Bullion briefly fell by about 2% to around US$4,365 per troy ounce. A US official said American forces carried out attacks on a military site and other targets around the Strait of Hormuz. The IRGC later claimed to have targeted the US base used to launch the attacks, while Kuwaiti air defenses said they were responding to missile and drone threats, underscoring the fragile security situation in the region.
These developments came hours after US President Donald Trump said he was “not satisfied” with negotiations with Iran, dampening hopes for a quick breakthrough. Trump also did not provide concrete steps to ensure free passage of ships through Hormuz, a key flashpoint. The near-closure of the waterway since late February has driven up energy prices and shaken the global economy.
The oil surge has reinforced the inflation channel. Brent crude surged to near US$98 on Thursday, raising inflation risks and reviving expectations of interest rate hikes. Even if a peace deal is finally reached, elevated energy prices are seen as potentially perpetuating inflation and forcing central banks to maintain high interest rates for longer, rather than cutting them as widely expected before the war.
Gold typically does not benefit in a high-interest rate environment because it offers no yield, while a stronger dollar adds to the pressure. Gold has fallen more than 17% since the conflict broke out in late February, nearly erasing its year-to-date gains. Fed Chair Lisa Cook stated on Wednesday that inflation is moving in the wrong direction and that she is prepared to support a rate hike if the situation persists.
On the sentiment side, options market signals indicate investors are reducing their bullish conviction. Implied volatility in SPDR Gold Shares has reportedly fallen sharply, and the premium to speculate or hedge against a three-month rise is near its lowest level since December. One strategist believes the market is starting to lose confidence in gold's safe-haven narrative in the short term and sees the US$4,000–US$4,250 area as a support zone if oil prices rebound.
At 1:18 p.m. Singapore time, spot gold fell 1.8% to US$4,374.11 per ounce. Silver fell 3.6% to US$71.98, while platinum and palladium also weakened. The Bloomberg Dollar Index rose 0.3%, extending its third consecutive day of gains. (asd)*
Source: Newsmaker.id
