Gold prices fell to their lowest level in two months on Thursday, as fresh U.S. attacks on Iran pushed oil prices higher, fueling concerns about rising inflation and clouding interest rate expectations.
As of 04:09 GMT, spot gold was down 1.7% at $4,380.62 per ounce, after earlier touching its lowest level since March 26. U.S. gold futures for June delivery also dropped 1.6% to $4,377.10.
The U.S. dollar climbed to its highest level in a week, making dollar-denominated gold more expensive for holders of other currencies.
Matt Simpson, senior analyst at StoneX, said: “Geopolitical tensions are still escalating, and we’ve received many false alarms regarding peace deal negotiations. So I think demand for the dollar will remain strong, which means gold is likely to stay under pressure.”
A U.S. official told Reuters that the American military carried out new strikes in Iran targeting a military site that officials believed posed a threat to U.S. forces and commercial shipping in the Strait of Hormuz. The strikes came hours after President Donald Trump denied an Iranian report about an agreement to restore traffic through the strategic waterway.
Oil prices rose more than 3% Thursday after Iran’s Revolutionary Guard announced it had targeted a U.S. air base in response to the American attack.
Higher oil prices could accelerate inflation and keep interest rates elevated for longer. Gold is traditionally viewed as a hedge against inflation, but higher interest rates tend to weigh on the non-yielding metal.
Lisa Cook, a member of the Federal Reserve Board of Governors, said Wednesday that she believes the U.S. central bank should keep short-term interest rates unchanged for now. However, she warned that tariffs, the Iran conflict, and rising AI-related investments are pushing prices higher, and she is prepared to support rate hikes if necessary.
Investors are also awaiting U.S. personal consumption expenditures (PCE) data due later Thursday for further clues on the future direction of U.S. monetary policy.
Among other precious metals, spot silver fell 3% to $72.37 per ounce, while platinum dropped 1.4% to $1,890.81, with both reaching their lowest levels in nearly a month. Palladium also declined 1.9% to $1,364.26.
Reuters
