Gold Slips on Stronger Dollar and Delayed Fed Cut Bets

Gold erased early gains to trade slightly lower at around $5,115 per ounce on Thursday, as a stronger US dollar and reduced expectations for interest rate cuts by the Federal Reserve offset safe-haven demand linked to the escalating Middle East conflict. Tensions intensified after Tehran was hit by a large wave of strikes from Israel, targeting infrastructure reportedly linked to Iranian authorities, following earlier Iranian missile attacks that sent millions of Israelis into bomb shelters. Iranian officials also denied reports that their intelligence ministry had approached Washington for negotiations, dismissing the claims as false. At the same time, concerns over energy supply disruptions continued to push oil prices higher and fuel inflation worries, prompting traders to push back expectations for monetary easing. Markets now anticipate the first Fed rate cut in September, with two reductions still priced in for 2026.

Gold rose to about $5,160 per ounce on Thursday, extending gains from the prior session, as investors continued to monitor escalating tensions in the Middle East. The conflict entered a sixth day, with US and Israeli forces striking targets across Iran and Tehran retaliating with missile attacks on several neighboring states, including key energy facilities. President Donald Trump backed the American campaign, while US officials said an Iranian warship was sunk in international waters. Iranian authorities denied reports that their intelligence ministry had approached Washington for negotiations, calling the claims false. Meanwhile, the Treasury Secretary confirmed a global 15% tariff will begin this week and may revert within five months. Higher oil and gas prices have revived inflation concerns, prompting traders to delay expectations for easing by the Federal Reserve, with a first cut now seen in September and two reductions still priced in for 2026.

Gold rose back above $5,160 per ounce on Wednesday, recovering some losses from the previous session, as investors tracked developments in the Middle East. The US-Israeli conflict with Iran entered its fifth day, with Israel striking a building where clerics were meeting to select a new Supreme Leader on Tuesday. US President Donald Trump voiced concern that the attacks could bring a new Iranian leadership as troubling as the previous regime, underscoring the conflict’s uncertain trajectory. Trump also pledged naval escorts and insurance support for oil tankers and other vessels through the Strait of Hormuz to ease market fears. Gold and other metals had tumbled on Tuesday as the dollar strengthened on worries that rising energy costs could drive inflation, prompting investors to reassess the Federal Reserve’s policy path.