Gold prices moved lower on Wednesday after U.S. President Donald Trump indicated that the interim peace framework between Washington and Tehran had effectively collapsed, boosting oil prices and reviving concerns over inflation.
By 09:36 GMT, spot gold had fallen 1.2% to $4,057.09 an ounce, while gold futures declined 2.2% to $4,066.56 an ounce.
Trump Says Agreement Is “Over”
Speaking during the NATO summit in Turkey, Trump accused Iran of failing to honour the agreement and suggested the diplomatic framework was no longer valid.
“We make a deal, and everyone’s agreed. No nuclear weapons. We make a deal. They go outside, talk to the press, they say we never even talked about it. There’s something wrong with them. They’re cuckoo. As far as I’m concerned, it’s over,” Trump said.
Earlier on Wednesday, Iranian military officials said they had launched attacks against U.S. military installations in Kuwait and Bahrain in response to recent American strikes inside Iran and Washington’s decision to revoke a sanctions waiver covering Iranian oil exports.
Iran’s Islamic Revolutionary Guard Corps said it had targeted 85 U.S. military sites and shot down an American MQ-9 drone. Previously, the Pentagon said its military operations were launched in response to attacks on commercial vessels travelling through the Strait of Hormuz, adding that U.S. forces had struck more than 80 targets inside Iran and over 60 IRGC vessels operating in and around the strategic waterway.
Although Tehran has not accepted responsibility for Tuesday’s attacks on commercial ships off the coast of Oman, the renewed military escalation has unsettled global financial markets.
Rising Oil Prices Revive Inflation Fears
Oil prices rebounded strongly, recovering part of the losses recorded after the peace framework was announced on 17 June. The renewed increase in crude prices has revived concerns that higher energy costs could once again fuel global inflation.
Investors continue to debate whether central banks, particularly the U.S. Federal Reserve, may need to tighten monetary policy further if inflationary pressures intensify. Analysts at Britannia Global Markets noted that expectations of an imminent rate increase had eased after last week’s weaker-than-expected U.S. employment figures but have strengthened again following the latest exchange of military strikes.
Higher interest rates generally reduce the appeal of non-yielding assets such as gold, while a stronger U.S. dollar can also weigh on demand by making bullion more expensive for international buyers.
Markets Await Federal Reserve Minutes
Attention now turns to the publication of the Federal Reserve’s June meeting minutes later on Wednesday.
The U.S. central bank kept interest rates unchanged within a range of 3.5% to 3.75% at its last meeting, although several policymakers projected that further rate increases could be appropriate during 2026.