Gold prices fell to their lowest level in over six months, driven by concerns about inflation and the prospect of prolonged high interest rates, according to Reuters.
The spot price of dropped by 0.2% to $4,063.87 per ounce, after earlier falling to its lowest level since 21 November. For August delivery, US gold futures decreased by 1.1% to $4,086.50.
Silver continued to face downward pressure, with COMEX down 0.23% to $64.59 per ounce, and the spot price down 0.9% to $63.15 per ounce.
Although gold is traditionally viewed as a safe-haven asset during periods of geopolitical uncertainty, the sharp rise in crude oil prices has shifted investor attention toward inflation risks and the prospect of interest rates remaining elevated for longer. Higher interest rates typically reduce the attractiveness of non-yielding assets such as gold and silver.
Adding to market concerns, recent US economic data showed consumer inflation accelerated in May, partly driven by higher energy costs linked to the escalating conflict in West Asia. Investors are now closely awaiting the release of the Producer Price Index (PPI) data for further clues on the Federal Reserve’s future policy trajectory.
The weakness in global bullion markets also spilt over into domestic trade. In India, MCX gold futures declined nearly 2% in the previous session, slipping below the ₹1.5 lakh per 10 grams mark after touching record highs of around ₹1.55 lakh– ₹1.56 lakh per 10 grams earlier this month.
Gold slides as Strait of Hormuz closure sparks market turmoil
surged more than $2 per barrel after Iran announced the closure of the Strait of Hormuz, intensifying concerns about disruptions to global energy supplies and fuelling fears of higher inflation worldwide.
The sharp rise in oil prices following the Strait of Hormuz closure has shifted investor attention from geopolitical safety trades toward inflation and interest-rate risks. Higher energy costs are reinforcing expectations that central banks, including the Federal Reserve, may keep interest rates elevated for longer, reducing the appeal of non-yielding assets such as gold and silver.
According to a Bloomberg report, gold prices tumbled as investors rushed to raise cash and cut risk exposure after a sharp escalation in the Iran-US conflict. Bullion fell as much as 1.2% to around $4,024 an ounce, extending Wednesday’s 4.4% drop, before recovering part of the losses in volatile trading.
The sell-off accelerated after the US military launched missile strikes on multiple targets in Iran, following President Donald Trump’s accusation that Tehran was stalling negotiations on an interim peace deal. In response, Iran announced the closure of the Strait of Hormuz to all vessels, heightening fears of disruption to global oil supplies and inflationary pressure.
Gold is now trading about 23% below levels seen before the Iran conflict intensified in late February. The metal’s decline through its 200-day moving average and the key $4,100-per-ounce support level triggered additional selling, as these thresholds are closely watched by institutional investors and technical traders, according to a Bloomberg report.
“The constant flow of conflicting headlines is increasing uncertainties and prompting investors to reduce risk exposure and raise liquidity across a range of asset classes,” said Robert Gottlieb, a consultant and former precious metals trader at JPMorgan Chase & Co., in a LinkedIn post cited by Bloomberg.
Gottlieb added that the latest decline appears to be driven more by “deleveraging and portfolio repositioning rather than a fundamental reassessment of gold as a safe-haven asset.”
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