Gold prices moved lower on Wednesday after President Donald Trump suggested that the fragile interim peace agreement between the U.S. and Iran was no longer in place.
His comments pushed oil prices higher and renewed concerns about inflation.
Spot Gold and Futures Decline
By 07:27 ET, spot gold had fallen 1.3% to $4,050.92 an ounce.
Gold futures also dropped, losing 2.3% to $4,060.82 an ounce.
The move showed how quickly geopolitical headlines can affect precious metals and broader financial markets.
Trump Casts Doubt on Peace Agreement
Speaking at a NATO summit in Turkey, Trump accused Iran of acting in bad faith.
He said both sides had reached an agreement, including terms related to nuclear weapons. However, he claimed Tehran later denied key parts of the discussions publicly.
Because of that, Trump said he considered the agreement finished.
Iran Says It Attacked U.S. Military Sites
Iranian armed forces said on Wednesday that they had attacked U.S. military sites in Kuwait and Bahrain.
Tehran described the strikes as retaliation for U.S. attacks on targets inside Iran.
Iran also pointed to Washington’s decision to revoke a sanctions waiver covering Iranian oil exports.
IRGC Claims Strikes on U.S. Targets
In a statement cited by Iran’s state news agency, the Islamic Revolutionary Guards Corps said it had struck 85 U.S. military sites.
The group also claimed it had shot down an American MQ-9 drone.
The latest claims added to fears that the conflict could widen across the Gulf region.
Strait of Hormuz Remains in Focus
The Pentagon previously said its strikes were a response to recent Iranian attacks on commercial vessels moving through the Strait of Hormuz.
The Strait of Hormuz is a vital route for global oil shipping and runs close to Iran’s southern coast.
U.S. Central Command also said it had struck more than 80 targets in Iran and more than 60 IRGC small boats in and around the strait.
Oil Prices Rise on Supply Concerns
Iran has not claimed responsibility for Tuesday’s attacks on ships off the coast of Oman.
Those ships reportedly included a Saudi oil tanker and a Qatari vessel carrying liquefied natural gas.
Against this tense backdrop, oil prices moved higher and recovered some of their recent losses.
Those losses had followed the signing of a framework peace deal on June 17.
Inflation Fears Return to Markets
The earlier surge in crude prices at the start of the war had already raised concerns about another inflation wave.
Now, investors are once again asking whether higher energy costs could push inflation upward across major economies.
This is especially important for central banks, including the Federal Reserve.
Fed Rate Hike Debate Intensifies
Markets are debating whether the Federal Reserve could respond to renewed inflation pressure by raising interest rates.
Expectations for an imminent Fed hike had cooled after weaker-than-expected payrolls data last week.
However, analysts at Britannia Global Markets said those expectations are rising again after the latest round of U.S.-Iran strikes.
Higher Rates Weigh on Gold
Higher interest rates can make gold less attractive to investors because gold does not pay interest or dividends.
A stronger U.S. dollar can also pressure gold prices.
When the dollar rises, bullion becomes more expensive for buyers using other currencies.
Gold Faces a Critical Moment
Lukman Otunuga, Head of Market Research at FXTM, said gold is now at an important crossroads.
On one hand, rising geopolitical tensions, higher energy prices, and inflation concerns could support gold.
On the other hand, if oil prices push inflation higher, markets may expect tighter monetary policy. That could become a headwind for bullion.
He also noted that softer U.S. economic data may limit how aggressively the Fed can raise rates.
Fed Minutes in Focus
Investors are now waiting for minutes from the Federal Reserve’s June meeting.
The minutes are due later on Wednesday and could offer more guidance on the interest-rate outlook.
At the meeting, the Fed kept rates unchanged in a range of 3.5% to 3.75%.
However, some Fed projections still pointed to possible rate increases in 2026.
