Gold Holds Steady Near $4080 Amid Middle East Escalation

SadaNews - Gold prices stabilized after a decline, as a second day of U.S. strikes against Iran drove energy prices higher, intensifying inflation concerns.

The precious metal was recorded near $4,092 per ounce, after falling for three consecutive days.

The latest attacks, which U.S. Central Command said were aimed at weakening Iran's ability to disrupt shipping in the Strait of Hormuz, came just hours after President Donald Trump said he believed the ceasefire "was over."

Tehran threatened to carry out a large-scale retaliatory operation against U.S. bases. Additionally, oil prices surged after Washington also revoked a waiver that had allowed Iran to sell crude globally.

Iran's Escalation Brings Inflation Back to Gold's Forefront

For gold traders, the escalation of fighting in the Middle East raises fears that the Federal Reserve may need to keep interest rates higher for a longer period to combat persistent inflation.

The minutes from the Federal Reserve's June meeting, released Wednesday, showed that a few monetary policy officials saw justification for raising rates, although they ultimately supported the decision to keep them unchanged.

Overall, the minutes reflected a growing concern among officials at the U.S. central bank regarding inflation, while worries about the labor market eased slightly. Typically, higher borrowing costs are a counteracting factor for gold, which does not yield interest.

Heidi Chen, an analyst at Vantage Markets in Melbourne, stated that the quiet start to Thursday's gold trading "seems more like hesitation before a new storm, rather than genuine calm." She added: "The market has heard the alarm bell from the Middle East, but it has not yet treated it as a fully-fledged crisis."

Gold Awaits Clarity on the New Cycle of Tension

Gold has declined by more than a fifth since the Iran war began in late February, with a wave of profit-taking ending a three-year upward trend, recently pushing the metal below $4,000.

However, there is little evidence so far that investors are building large short positions in anticipation of further declines. Chen stated: "Traders are watching to see whether the risks will shift from news shock to the beginning of a new cycle of geopolitical tension, and how severe the potential cascading effects might be." She added: "Until that confirmation arrives, gold may remain in a waiting pattern."

Spot gold fell 0.1% to $4,073.48 per ounce at 7:48 AM in Singapore, while silver rose 0.2% to $58.39 per ounce.

Platinum and palladium rose slightly, while the Bloomberg Dollar Spot Index, a measure of the U.S. currency, saw little change after finishing the previous session down marginally.

Silver Price

Silver prices were recorded near $58 per ounce.