The conflict has entered its fourth week. Since the joint U.S.-Israel strikes on Iran on February 28, thousands have been killed across the Middle East, and the fighting has spread throughout the region. The latest flashpoint came from U.S. President Donald Trump, who issued a dramatic ultimatum on social media last Saturday: if Iran does not fully and unconditionally reopen the Strait of Hormuz within 48 hours, the United States will completely destroy Iran’s largest power plant. This marks a 180-degree reversal from his previous day’s comments suggesting de-escalation.

Iran responded just as forcefully. The Islamic Revolutionary Guard Corps stated that if the U.S. strikes Iran’s power facilities, the Strait would be completely closed until reconstruction is complete. Iran’s parliamentary speaker warned that if its infrastructure is attacked, all energy and oil facilities across the Middle East would become legitimate targets, potentially driving oil prices sharply higher for an extended period.

The Middle East crisis has directly pushed energy prices to their highest levels since July 2022, with gains nearing 50% this month. Iran’s attacks on a Kuwaiti refinery and the closure of the Strait of Hormuz have caused European natural gas prices to surge 35% in just one week. The U.S. is also deploying thousands of additional Marines and naval personnel, further intensifying concerns over oil supply disruptions.

Rising energy prices are now feeding through global supply chains. Europe, which relies more heavily on imported energy, faces particularly severe inflationary pressure. Although gold is traditionally seen as a hedge against inflation, expectations of higher interest rates driven by soaring oil prices have become the biggest bearish factor for gold.

Before the conflict, markets expected the Federal Reserve to cut rates twice in 2026. Now, many believe even one rate cut is unlikely, with the possibility of rate hikes instead. A stronger U.S. dollar reduces gold’s appeal to non-dollar holders, while higher interest rates increase the opportunity cost of holding non-yielding assets like gold. Precious metals are therefore under pressure, and after this week’s sharp correction driven by rate-hike fears, price movements are likely to remain volatile.

Despite the current bearish pressure, if the Middle East conflict continues to escalate—especially if the Strait of Hormuz remains closed or key infrastructure is attacked—oil prices could hit new highs. Inflation may spiral out of control, and gold’s safe-haven appeal could ultimately outweigh interest rate pressures, pushing it back into a strong upward trend.

Market Analysis:
On the 4-hour chart, gold has fallen sharply. The MACD lines and histogram are showing a converging bullish divergence below the zero axis. This gold movement, triggered by the Middle East conflict, is far from ordinary volatility—it reflects a convergence of three major forces: global inflation, interest rates, and geopolitical risk. The battle around the $4,300 level has just begun. Investors should closely monitor three key signals: the Strait of Hormuz, Trump’s statements, and oil price fluctuations.