Gold Prices Drop as U.S.-Iran Conflict Fuels Inflation Concerns
Gold prices moved lower on Thursday, falling to their weakest levels in nearly two months as renewed military strikes between the United States and Iran pushed oil prices higher and intensified fears of energy-driven inflation.
By 09:05 ET (13:05 GMT), spot gold had declined 0.4% to $4,436.94 per ounce, while gold futures slipped 0.5% to $4,459.09 per ounce.
U.S.-Iran Hostilities Escalate Again
Iran’s Islamic Revolutionary Guard Corps announced that it had launched strikes against a U.S. airbase in Kuwait in retaliation for American attacks earlier in the day on the Iranian port city of Bandar Abbas.
Kuwait separately confirmed that it was defending against incoming missile and drone attacks, although officials did not specify who launched them.
The latest developments marked a renewed escalation in tensions between Washington and Tehran, despite repeated statements from U.S. officials claiming that a ceasefire agreement remained active.
Earlier this week, the United States carried out strikes against Iran, describing the operation as defensive in nature.
Trump Comments Add to Market Uncertainty
Thursday’s escalation came shortly after U.S. President Donald Trump rejected reports suggesting Iran would reopen commercial shipping through the Strait of Hormuz within the next month.
Trump later indicated that he was not yet satisfied with the terms of a possible peace agreement aimed at ending the three-month-long conflict.
The uncertainty surrounding the Strait of Hormuz and Middle East oil supplies continued to support crude prices.
Rising Oil Prices Pressure Gold Outlook
Oil prices climbed again following the attacks, remaining below $100 per barrel but significantly above levels seen before the conflict began.
Markets remain concerned that higher energy prices could trigger another wave of inflation, potentially forcing central banks to maintain higher interest rates or even tighten monetary policy further.
That environment tends to weigh on gold because the precious metal does not generate yield and often underperforms when interest rates remain elevated for an extended period.
Analysts at ING noted that interest rate markets are still pricing in elevated central bank expectations.
Fed Inflation Data Remains in Focus
Investors also monitored fresh U.S. inflation data for additional clues on how the Iran conflict is impacting prices and Federal Reserve policy expectations.
The Core Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation measure — rose 3.3% year-over-year in April, matching forecasts and coming in above March’s 3.2% reading.
On a monthly basis, core PCE increased 0.2%, slightly below expectations of 0.3%.
Meanwhile, headline PCE inflation accelerated to 3.8% annually from 3.5% previously, while the monthly reading slowed to 0.4% from 0.7%.
The latest figures reinforced concerns that inflation pressures remain persistent as geopolitical tensions continue to influence global energy markets.
