Gold hits six-month low as fresh US strikes on Iran fuel oil rally, inflation fears – Firstpost

Gold prices fell to their lowest level in more than six months on Thursday after fresh US military strikes on Iran triggered a sharp rally in oil prices, stoking concerns that inflation could remain elevated and keep interest rates higher for longer.

Spot gold slipped 0.2 per cent to $4,063.87 an ounce in early trade, after touching its weakest level since November 21. US gold futures for August delivery fell 1.1 per cent to $4,086.50 an ounce as investors reassessed the outlook for inflation and monetary policy.

The decline came after the United States launched a fresh round of strikes against multiple targets in Iran, escalating tensions in West Asia and raising fears of a prolonged conflict. The military action followed President Donald Trump’s warning that Washington would intensify attacks if a peace deal with Tehran was not secured.

The latest escalation sent crude oil prices sharply higher. Brent crude climbed above $95 a barrel while US West Texas Intermediate crude surged past $92 a barrel after Iran announced the closure of the Strait of Hormuz, a vital shipping route through which roughly one-fifth of global oil and gas supplies normally pass.

Higher oil prices have reignited inflation concerns across global markets. While gold is traditionally viewed as a hedge against inflation and geopolitical uncertainty, analysts said the current environment is proving challenging for the precious metal because rising energy prices are also strengthening expectations that central banks will keep interest rates elevated.

That concern intensified after data released on Wednesday showed US consumer inflation accelerated in May at its fastest pace in three years, driven largely by higher energy costs linked to the conflict in West Asia. The stronger inflation reading has reinforced expectations that the US Federal Reserve could maintain a restrictive policy stance for an extended period.

Higher interest rates generally reduce the appeal of non-yielding assets such as gold because investors can earn better returns from bonds and other fixed-income instruments.

The selloff in bullion also reflected a broader shift in market sentiment. Investors have increasingly moved into the US dollar, traditionally viewed as a safe-haven asset during periods of geopolitical uncertainty. A stronger dollar makes gold more expensive for holders of other currencies, adding further pressure on prices. Similar market dynamics have weighed on gold throughout recent phases of the US-Iran conflict.

Market participants are now awaiting the release of the US Producer Price Index (PPI) data later on Thursday for additional clues on inflation trends and the Federal Reserve’s next policy move. Any sign that price pressures remain persistent could further strengthen expectations of a higher-for-longer interest rate environment.

Other precious metals also came under pressure. Spot silver fell 0.9 per cent to $63.15 an ounce, while platinum lost 0.6 per cent to $1,655.06. Palladium bucked the trend, rising 1 per cent to $1,225.25 an ounce.

Meanwhile, supply-side developments remained in focus. Ivory Coast, one of Africa’s key gold producers, expects gold output to rise to 62 metric tonnes in 2026 from 59.33 tonnes in 2025 as existing mines expand production, according to the country’s director general of mines.