Recent developments in the Middle East have become the primary catalyst for short-term gold price movements. Reports suggest that the United States has shown willingness to end military operations against Iran, even as disruptions in shipping through the Strait of Hormuz remain unresolved.

This has raised hopes for de-escalation. However, the same reports emphasize that the U.S. remains committed to weakening Iran’s naval and missile capabilities while seeking to restore trade flows through diplomatic means, suggesting that tensions are unlikely to ease quickly.

On social media, President Donald Trump criticized France for denying U.S. military supply flights access to its airspace and urged allies such as the United Kingdom to secure their own energy supplies. These remarks highlight the complexity of the diplomatic landscape. Meanwhile, Iran’s parliamentary committee has approved a plan to impose transit fees on vessels passing through the Strait of Hormuz, further increasing uncertainty around this critical energy corridor.

These developments have pushed oil prices higher, raising concerns about global supply chains and inflation pressures. As a traditional safe-haven asset, gold would typically benefit from such conditions. However, the reality is more nuanced. Persistent conflict risks are driving up energy costs, which in turn could intensify inflation expectations.

High oil prices not only increase production costs but may also weigh on economic growth, placing central banks in a policy dilemma. Investors are assessing whether a clear de-escalation could lead to a pullback in oil prices, offering relief to gold. For now, however, expectations of easing are only sufficient to keep gold trading within a range.

The U.S. dollar index remains near a ten-month high, increasing the cost of holding dollar-denominated gold for non-U.S. investors and dampening buying interest. As a non-yielding asset, gold typically faces selling pressure when the dollar strengthens. At the same time, global central bank policy paths are undergoing subtle shifts. While markets previously anticipated a more accommodative stance, rising inflation concerns driven by higher oil prices have delayed expectations for rate cuts. Unlike past geopolitical crises where gold rallied strongly on safe-haven demand, interest rates and currency dynamics are currently dominating price movements.

Nevertheless, gold’s medium-term outlook remains solid. Supported by continued central bank purchases and expectations of two rate cuts in the United States this year, gold prices could rise toward $5,500 per ounce. In the short term, however, tactical downside risks remain. Even so, if the Iran conflict accelerates global diversification away from traditional Western assets, gold’s upside potential could be substantial.

Market Interpretation:

On the four-hour chart, gold continues to trend higher, with MACD lines and volume bars expanding above the zero axis. Concerns that some central banks might sell gold to support their currencies are unlikely to materialize. Gulf countries are more likely to intervene by adjusting their holdings of U.S. Treasuries, given their dollar-pegged exchange rate regimes.