Gold dips as Mideast hostilities revive inflation concerns

Synopsis

Gold prices experienced a decline on Thursday after recent drops. Renewed hostilities between the United States and Iran fueled inflation worries. Higher interest rate expectations also pressured the non-yielding precious metal. Central banks worldwide are monitoring inflation and economic growth forecasts. Other precious metals like silver, platinum, and palladium saw mixed movements.

Gold prices fell on Thursday after hitting a one-week low in the previous session, as U.S. President Donald Trump's declaration that an interim agreement to end the war with Iran was "over" reignited concerns over higher inflation and interest rates.

FUNDAMENTALS

Spot gold fell 0.3% to $4,066.24 per ounce by 0105 GMT, after dropping to its lowest since July 1 on Wednesday. U.S. ‌gold futures for ⁠August delivery ⁠were down 0.1% at $4,077.

The U.S. military said on Wednesday that it was launching fresh strikes on Iran aimed at keeping the critical Strait of Hormuz open to traffic, hours after Trump said that the memorandum of understanding signed to end the conflict was "over."

Oil prices extended gains after settling nearly 5% higher on Wednesday, while the dollar and stock markets dipped in response to the latest escalation in ⁠the U.S.-Iran ‌war. [MKTS/GLOB] [O/R] [USD/]

Renewed hostilities in the Middle East underscored how quickly the oil market can reignite worries about inflation and volatility.

Concern about high ⁠inflation also mounted at the U.S. central bank's meeting last month, as officials followed Federal Reserve Chairman Kevin Warsh's lead to a more stripped-down policy statement even amid concerns that price increases were broadening and might require interest rate hikes.

While gold is seen as an inflation hedge, high interest rates tend to weigh on the non-yielding asset.

The International Monetary Fund on Wednesday lowered its 2026 global growth forecast again to 3.0%.

Bank ‌of America said it is reducing its 2026 average gold forecast by 14% to $4,360 an ounce, citing a more hawkish Fed.

Tanzania's central bank has bought about 28 metric ⁠tons of gold over the past 18 months to bolster its international reserves and support the shilling currency, its Governor Emmanuel Tutuba said.

India's restrictions on silver imports have created shortages in the world's biggest market for the precious metal, pushing premiums to their highest levels in six months despite weaker-than-usual demand.

Elsewhere, spot silver eased 0.3% to $58.13 per ounce, platinum rose 0.4% to $1,585.11 and palladium gained 0.4% to $1,218.

DATA/EVENTS (GMT)

0130 China PPI, CPI YY Jun

0900 Germany Overall Comprehensive Risk Q3

0900 France Overall Comprehensive Risk Q3

0900 UK Overall Comprehensive Risk Q3

1230 US Initial Jobless Clm 4 Jul, w/e

1400 US Existing Home Sales Jun

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