Gold Stays Above $4,000 Amid Tensions in the Strait of Hormuz

SadaNews - Gold has retreated to around $4,000 per ounce after the United States and Iran exchanged attacks in the waters of the Arabian Gulf, putting pressure on the ceasefire which saw energy prices drop to pre-war levels last week, easing expectations for interest rate hikes.

Spot gold fell by as much as 0.9% after rising 1.6% on Friday. Oil gained after a tanker carrying Qatari crude was hit during reciprocal attacks between Washington and Tehran over the weekend, disrupting shipping through the Strait of Hormuz.

Since then, both sides have agreed to stop attacks and meet on Tuesday in Doha, according to Axios, citing unnamed U.S. officials.

Justin Lin, an analyst at Global X ETFs Australia, stated that gold’s ability to stay above $4,000 despite renewed signs of tension in the strait "indicates that marginal dip buyers have returned and are willing to defend this level."

Gold Amid Hormuz Tensions and U.S. Inflation Data

The latest developments in the Middle East come in the wake of U.S. inflation data, which, despite rising, was within analysts' estimates. Treasury yields fell after the U.S. personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, rose 0.4% in May compared to the previous month.

The price of gold has lost about 23% since the U.S. and Israel struck Iran in late February, as higher energy prices fueled inflation and raised expectations that central banks would keep interest rates higher for a longer period, a negative factor for non-yielding gold.

Lin commented, "I expect gold to become more resilient to Middle Eastern volatility, especially now after fully erasing its gains since the beginning of the year, and it is likely that investors seeking quick profits have largely moved to other destinations."

Spot gold dropped 0.6% to $4,064.47 per ounce at 8:53 a.m. Singapore time. Silver fell 1.1% to $58.50. Platinum and palladium also declined, while the Bloomberg Dollar Spot Index rose slightly.