Gold prices moved lower on Thursday, slipping to their weakest levels in two months as renewed military tensions between the United States and Iran pushed oil prices higher and revived fears of a fresh inflation shock.
At 05:33 ET (09:33 GMT), spot gold had fallen 1.4% to $4,392.88 per ounce, while gold futures declined 1.3% to $4,423.37 per ounce. The latest selloff pushed spot prices below the $4,400-per-ounce level and out of the broad trading range between $4,400 and $4,600 that had largely held since mid-May.
Fresh U.S.-Iran Attacks Renew Market Anxiety
Iran’s Islamic Revolutionary Guard Corps announced that it had launched strikes against a U.S. airbase in Kuwait in response to earlier American attacks on the Iranian port city of Bandar Abbas.
Separately, Kuwaiti authorities confirmed that the country’s air defenses had intercepted missiles and drones, although officials did not identify where the attacks originated.
The renewed military action marked another escalation in hostilities between Washington and Tehran despite repeated statements from the United States claiming that a fragile ceasefire remained intact. Earlier this week, the U.S. described its strikes on Iran as defensive measures.
Thursday’s developments came shortly after U.S. President Donald Trump dismissed reports suggesting Iran could reopen commercial shipping routes through the Strait of Hormuz within a month. Trump later indicated he remained unconvinced by proposals aimed at securing a peace agreement to end the conflict, which has now lasted roughly three months.
Rising Oil Prices Keep Inflation Risks Elevated
Oil prices climbed again following the latest escalation, remaining below the $100-per-barrel threshold but still significantly above levels seen before the conflict began.
Markets remain concerned that sustained increases in energy prices could trigger another wave of inflation globally, potentially forcing central banks to respond with additional interest rate hikes.
Such an environment is typically considered unfavorable for gold, which does not generate yield and often struggles when borrowing costs remain elevated for longer periods.
“Rates markets are still displaying elevated central bank pricing,” analysts at ING said in a note.
Investors Await Key U.S. Inflation Data
Further insight into inflation trends is expected later on Thursday with the release of the U.S. personal consumption expenditures (PCE) price index for April.
Economists expect the headline annual PCE inflation rate to accelerate to 3.8% from 3.5%, while the monthly figure is forecast to ease to 0.5% from 0.7%.
Core PCE inflation, which excludes more volatile components such as food and fuel, is projected to rise slightly to 3.3% year-on-year and remain unchanged month-on-month at 0.3%.
The PCE index is one of the Federal Reserve’s preferred measures of inflation, and recent comments from Fed officials have highlighted growing divisions within the central bank regarding the future direction of interest rates.