Gold Prices Drop to Two-Month Low Amid Escalating US-Iran Conflict
Gold prices declined sharply during Asian trading on Thursday as renewed military tensions between the United States and Iran boosted both oil prices and the U.S. dollar.
The precious metal fell to its lowest level in two months after comments from U.S. officials weakened expectations for a near-term peace agreement between Washington and Tehran, increasing investor concerns over inflation and prolonged geopolitical instability.
Spot gold dropped 1.4% to $4,392.86 per ounce by 01:50 ET (05:50 GMT), while gold futures declined 1.3% to $4,422.76 per ounce.
The latest selloff pushed spot gold below the $4,400 support level and out of the trading range between $4,400 and $4,600 that had held since mid-May.
Silver and Platinum Also Decline
Other precious metals also posted notable losses on Thursday.
Spot silver fell 1.9% to $73.2985 per ounce, while platinum dropped 1.6% to $1,899.42 per ounce as broader market sentiment weakened.
US and Iran Exchange New Air Strikes
The United States and Iran exchanged fresh air strikes early Thursday, signaling a renewed escalation in hostilities and further undermining the fragile ceasefire established in early April.
Iran reportedly launched attacks against a U.S. military base in Kuwait in response to strikes targeting a site in southern Iran.
According to reports citing U.S. officials, Washington described its latest strikes as “defensive” while maintaining that the ceasefire technically remains in place.
However, markets reacted negatively as oil prices surged approximately 4% following the attacks, while the U.S. dollar climbed to near two-month highs.
Trump Rejects Hormuz Deal Reports
U.S. President Donald Trump on Wednesday dismissed reports suggesting a framework agreement could reopen the Strait of Hormuz within 30 days.
Trump also rejected proposals involving Iran and Oman jointly controlling shipping traffic through the strategically important waterway.
Meanwhile, the U.S. Treasury Department imposed sanctions on an Iranian entity reportedly established to collect transit tolls from vessels passing through Hormuz.
Although some oil tankers continue to move through the Strait of Hormuz, shipping volumes remain significantly below pre-conflict levels.
PCE Inflation Data in Focus
Beyond geopolitical tensions, investors are also closely watching upcoming U.S. Personal Consumption Expenditures (PCE) price index data for April.
The PCE index is the Federal Reserve’s preferred inflation gauge and is expected to play a major role in shaping interest-rate expectations.
Growing concerns about the inflationary effects of rising oil prices and the Iran conflict have increased speculation that the Federal Reserve could maintain higher interest rates for longer or potentially tighten policy further later this year.
Higher interest rates generally weigh on gold prices because the metal does not offer yield.
Inflation Fears Overshadow Gold’s Safe-Haven Appeal
Despite gold traditionally being viewed as a safe-haven asset during geopolitical crises, fears of higher inflation and elevated interest rates have largely outweighed that appeal in recent months.
Analysts noted that gold has increasingly traded like a risk-sensitive asset since March as markets focus more heavily on monetary policy and inflation trends.
Investors are now awaiting the core PCE inflation reading for additional insight into how rising energy prices are affecting broader U.S. inflation pressures.
