gainst the backdrop of rapidly deteriorating geopolitical tensions, spot gold continued its sharp decline on Thursday, briefly touching US$4,024 and falling to its lowest level since November 11, 2025.

On Wednesday, US President Donald Trump once again adopted a hardline stance, stating that if Iran failed to reach an agreement during negotiations, the United States would launch severe military strikes against the country. The rhetoric quickly turned into action, as US forces, acting under Trump’s orders, launched a new round of attacks against multiple targets near the Strait of Hormuz, including Iranian air defense systems and radar installations.

In response, Iran’s Supreme Joint Military Command announced the closure of the Strait of Hormuz, warning that any vessel attempting to pass through would become a legitimate target. Iran subsequently launched missiles and drones at nearby US vessels.

The announcement of the blockade immediately sent global oil prices sharply higher. The surge in energy prices directly boosted global inflation expectations and intensified market concerns that the Federal Reserve would maintain elevated interest rates or even raise rates further. This, in turn, created significant pressure on gold despite its traditional role as a safe-haven asset.

Trump also revealed that US forces had secretly escorted vessels carrying more than 100 million barrels of crude oil through the Strait, partially easing concerns about supply disruptions. However, the move was not enough to reverse the broader upward trend in oil prices. At the same time, Trump emphasized that the latest military action was a limited retaliatory operation rather than the start of a full-scale war.

Alongside escalating geopolitical tensions, investors are also grappling with the latest US inflation data.

The US Department of Labor reported that the Consumer Price Index (CPI) rose 4.2% year-on-year in May, marking the highest reading since April 2023. Surging energy costs were identified as the primary driver behind the increase.

According to the CME FedWatch Tool, investors now estimate the probability of a Federal Reserve rate hike in December at approximately 72%.

This represents a dramatic shift from the beginning of the year, when markets were broadly pricing in rate cuts.

Gold, traditionally regarded as a classic safe-haven asset, would normally benefit from rising geopolitical tensions. However, the unique nature of the current Middle East conflict has altered the market narrative.

The conflict is directly driving higher energy prices, which are feeding into inflation and reinforcing expectations of a more hawkish Federal Reserve. As a result, gold’s safe-haven appeal has been partially offset by growing fears of further monetary tightening.

Nevertheless, continued central bank gold purchases and depreciation pressures affecting several global currencies are still providing underlying support for gold prices.

At the same time, diplomatic efforts have not completely collapsed. A Qatari delegation continues to mediate between the United States and Iran, while Trump disclosed that Iran has requested a ceasefire, suggesting that a temporary easing of tensions remains possible.

Should the situation cool materially, a decline in oil prices could reduce inflation pressures and allow gold to stage a recovery rally.

Market Analysis:

Gold continued to trend lower on the 4-hour chart, with both the MACD lines and histogram remaining below the zero line while showing signs of convergence.

Historically, geopolitical conflicts of this nature often pressure gold in the initial stages before eventually becoming supportive as risk premiums are gradually absorbed by the market.

With gold now trading at relatively depressed levels, the current environment may still offer an attractive risk-reward profile for medium- to long-term investors looking to build positions on weakness.