Gold Price Rises Over 1% as U.S.-Iran Strikes Escalate and Fed Minutes Signal Rate Uncertainty

TLDR

• Gold jumped more than 1%, climbing back above $4,100 an ounce after three days of losses
• U.S. and Iran exchanged military strikes again, with attacks reported in Kuwait and Bahrain
• Fed minutes showed policymakers split on rate hikes, offering some support to gold
• Higher energy prices are pushing inflation worries higher, which could keep rates elevated
• A stronger dollar and hawkish Fed signals continue to cap gold’s upside

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Gold prices bounced back sharply on Thursday, rising more than 1% after a rough three-day stretch. Spot gold climbed 1.14% to $4,123.91 an ounce, while gold futures gained 1.25% to $4,132.95 an ounce.

The rebound came as investors turned back to gold as a safe-haven asset following a fresh round of military exchanges between the United States and Iran.

U.S.-Iran Conflict Drives Demand for Gold

The United States launched new attacks on Iran on Thursday, hours after President Donald Trump said a ceasefire with Tehran had collapsed. The conflict began escalating in late February with the outbreak of U.S.-Iran hostilities.

Iran’s military responded with strikes on what it called U.S. military bases in Kuwait and Bahrain. The Islamic Revolutionary Guards Corps warned of more strikes on American military positions in the Gulf if Washington continues its attacks.

The latest flare-up has rattled energy markets. Iranian attacks on ships trying to pass through the Strait of Hormuz sent oil prices higher, which in turn raised fears about energy-driven inflation.

Higher oil prices make it harder for the Federal Reserve to cut interest rates. That puts gold in a tough spot, since lower rates tend to benefit the non-yielding metal while higher rates reduce its appeal.

“Any rebound in energy prices will reinforce expectations that the Fed may keep interest rates higher for longer to combat stubbornly high inflation,” analysts at ANZ said in a note.

Fed Minutes Add Mixed Signals

Minutes from the Federal Reserve’s June meeting gave markets something to think about. Policymakers were divided on whether more interest rate hikes were needed, which gave gold some support.

The possibility that rate hikes could pause later this year helped lift sentiment around bullion. Lower borrowing costs reduce the opportunity cost of holding gold, which pays no interest.

But the same minutes also showed that Fed officials are growing more concerned about persistent inflation. U.S. price pressures have been running well above the central bank’s 2% target since the conflict with Iran began.

“The minutes reaffirm that the door is very much wide open to a September interest rate hike,” said Thomas Ryan from Capital Economics.

The U.S. dollar stayed mostly flat at 100.98 on Thursday but remains near 13-month highs reached in June. A stronger dollar can make gold more expensive for buyers using other currencies, which tends to limit demand.

Gold had been under pressure earlier in the week as the dollar strengthened on inflation fears tied to the conflict. Thursday’s gains bring gold back above the $4,100 level after Wednesday’s selloff pushed it below that mark.