Gold Rises Slightly Amid Middle East Tensions

Gold edged higher to $4,750 per ounce on Thursday, as investors weighed the fragility of the US-Iran ceasefire amid escalating Middle East conflict, while the surge in oil prices heightened concerns over energy inflation. The precious metal hovered near its highest level since March 19, supported by a slightly weaker dollar, as traders monitored whether the ceasefire would hold. Key disputes remain unresolved, and the Strait of Hormuz stays closed. US President Donald Trump warned of major escalation if Iran rejects a deal, while Israel’s deadliest attack in Lebanon, killing over 250, prompted Tehran to threaten retaliation. Since the war began on February 28, gold has lost over 11%, as soaring oil prices dampened expectations of US rate cuts in 2026.

Gold steadied near $4,700 per ounce on Thursday following sharp swings in the previous session, as investors assessed a fragile ceasefire in the Middle East amid sporadic fighting and lingering uncertainty over the reopening of the Strait of Hormuz. Iranian media reported that oil tanker transit through the strait had been halted after Israeli strikes on Lebanon, while a senior Iranian official said three provisions of the ceasefire proposal had already been breached. Meanwhile, US Vice President JD Vance said there are indications the strait may begin reopening as he leads a US delegation to Islamabad for direct talks with Iran. Oil prices rebounded slightly and the dollar and bond yields edged higher, maintaining downward pressure on gold. On Wednesday, bullion climbed as much as 3.3% following the ceasefire announcement, before giving up nearly all those gains as investors took profits amid a broader risk-on rally in global equities.

Gold prices pared most of the earlier gains but remained in positive territory on Wednesday, holding above $4,700 per ounce, as traders continued to assess developments in the Middle East and their implications for the economic and monetary outlook. The US and Iran agreed to a temporary two-week ceasefire, including the reopening of the Strait of Hormuz and a suspension of US military strikes. In response, oil prices plunged, the dollar weakened, and bond yields declined, all of which supported demand for bullion. However, some investors moved to take profits as risk appetite returned to global equity markets. At the same time, caution persisted amid reports of localized airstrikes in the region, underscoring the fragility of the Pakistan-brokered truce. Meanwhile, minutes from the FOMC’s March meeting showed policymakers were concerned that Middle East hostilities could lead to sustained inflation requiring further rate hikes, although they still expected one rate cut this year.