Gold Falls Below $4200 as Clashes Renew Between America and Iran

SadaNews - Gold continued its decline after the United States launched new strikes against Iran in response to the downing of a military helicopter, threatening efforts to end the war that has shaken global markets.

The price of gold dropped by up to 2%, recording around $4180 per ounce, after falling 1.6% in the previous session. U.S. forces targeted Iranian positions near the Strait of Hormuz after President Donald Trump held Tehran responsible for downing an American helicopter off the coast of Oman. The Iranian news agency "Mehr" reported hearing several explosions on Qeshm Island and along the southern coast of the country.

Extension of the Closure of the Strait of Hormuz

The recent clashes threaten the fragile ceasefire and herald an extension of the near-complete closure of the Strait of Hormuz, which is a vital route for energy shipments from the Middle East to global markets. Iranian Foreign Minister Abbas Araghchi stated in a post on the "X" platform that his country "will not leave any attack or threat without response," while the official Iranian radio and television organization reported that Tehran later launched a drone attack on the U.S. Fifth Fleet headquarters in Bahrain.

Oil prices rose again on Wednesday, increasing fears regarding global inflation, making central banks more likely to either hold or raise interest rates, which creates a barrier to non-yielding precious metals. Brent crude rose by up to 2% to trade above $93 per barrel before reducing its gains after the announcement that the U.S. had ended its brief retaliatory campaign.

Gold is currently trading at less than one-fifth of its price before the outbreak of the Iranian war at the end of February. The recent drop of the metal below its 200-day moving average—a widely monitored indicator of long-term market momentum—led to further selling, as this level is considered significant for institutional investors.

Suki Cooper, Global Head of Commodities Research at Standard Chartered Plc, stated in a note that "price movements may become more susceptible to pressure in the near term" with increasing interest rate hike probabilities. She added that more gold-backed exchange-traded fund holdings could turn into losing positions if the metal continues to decline, "exposing gold to further downside risks."

Cooper noted that the next technical support level for gold is near $4100 per ounce. She added that while some markets like India appear weak, China remains a bright spot for demand, with the local premium stabilizing at under $10 per ounce.

Silver Price

Silver prices were also recorded near $63 per ounce.