Gold prices fell to their lowest level in more than six months on Thursday as renewed US military action against Iran pushed oil prices higher, intensifying concerns about inflation and the prospect of elevated interest rates for an extended period.
Fundamentals
Spot gold declined 0.2% to $4,063.87 per ounce by 0043 GMT after touching its weakest level since November 21 earlier in the session.
US gold futures for August delivery dropped 1.1% to $4,086.50 per ounce.
The US military announced on Wednesday that it had launched a new series of strikes against several targets in Iran overnight. The development came shortly after President Donald Trump warned that additional attacks would follow if a peace agreement is not reached.
Oil prices surged by more than $2 on Thursday after Iran declared the closure of the Strait of Hormuz in response to the latest US military action.
Rising crude oil prices can fuel inflationary pressures. Although gold is traditionally viewed as a hedge against inflation, higher interest rates generally reduce the appeal of the non-yielding precious metal.
Recent data showed that US consumer inflation accelerated in May at its fastest annual pace in three years, largely driven by higher energy costs linked to tensions in the Middle East. The figures have strengthened expectations that the Federal Reserve may maintain interest rates at current levels well into 2027.
Investors are now awaiting the release of the US Producer Price Index (PPI) data for May later in the day, which could offer further clues about the Fed’s policy direction.
In West Africa, Ivory Coast’s director general of mines told Reuters that the country’s gold production is projected to rise to 62 metric tons in 2026 from 59.33 metric tons in 2025, supported by the expansion of existing mining operations.
Among other precious metals, spot silver fell 0.9% to $63.15 per ounce, platinum declined 0.6% to $1,655.06, while palladium advanced 1% to $1,225.25 per ounce.
