Gold Holds Decline as US Strikes Iran

Gold traded around $4,100 an ounce on Wednesday after dropping more than 1% in the previous session, as the US military launched fresh air strikes on Iran following recent attacks on ships transiting the Strait of Hormuz. The renewed escalation threatened the interim US-Iran peace deal and drove oil prices higher, stoking inflation fears and raising prospects for interest rate hikes. The US also revoked a waiver allowing Iran to sell crude on global markets, while the latest hostilities discouraged shipowners and regional producers from using Hormuz, raising the risk of renewed disruptions to global energy supplies. Meanwhile, investors awaited the minutes of the Federal Reserve’s June meeting for further clues on the policy outlook. Gold had recently rebounded after softer-than-expected US jobs data prompted markets to scale back expectations for near-term Fed rate increases, though the renewed Middle East tensions kept the outlook uncertain.

Gold trimmed earlier losses to trade flat at $4,170 per ounce on Tuesday, as investors assessed escalating Middle East hostilities and awaited the Federal Reserve’s June meeting minutes for clues on monetary policy. The precious metal had reached a two-week high on Monday after a softer-than-expected US jobs report led markets to scale back expectations for near-term interest rate hikes. However, persistent inflation concerns suggest the Fed may still maintain a "higher for longer" stance, with traders pricing in a 60% chance of a September rate hike. Meanwhile, oil prices edged higher after two tankers were struck in the Strait of Hormuz, and Iran stated it would halt peace talks unless President Trump ceased his repeated threats to restart the war. Elsewhere, China extended its gold-buying streak to 20 months, with reserves at 75.44M oz, while Hong Kong launched a gold clearing system and revived futures trading to boost its regional hub status.

Gold eased below $4,150 an ounce on Tuesday, but held most of last week's gains as investors awaited the minutes of the Federal Reserve’s June meeting for fresh clues on the outlook for interest rates. Data released last week showed US job growth slowed sharply in June, while payroll figures for the previous two months were revised lower, leading markets to scale back expectations of a near-term rate hike. Traders are now pricing in roughly a 50% chance of a Fed rate increase in September, down from about two-thirds before the latest employment report. The precious metal also drew support from lower oil prices as traffic through the key Strait of Hormuz continued to recover following the implementation of the interim US-Iran peace agreement. Meanwhile, Middle Eastern producers ramped up output and cut prices in response to changing market conditions, while OPEC+ agreed to increase production quotas for next month.