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Gold falls to around $4,050 amid Middle East inflation fears

Oil-price pressure tied to Red Sea and Iran conflict dynamics is lifting expectations for Federal Reserve tightening.

Reported · Written up by our desk · Precious Metals

Gold prices retreated in early Asian trade Friday, slipping toward about $4,050 per ounce as selling interest increased from a recent two-month high, FXStreet reported. The move comes as renewed tensions in the Middle East pushed oil higher, reinforcing concerns about inflation and, in turn, expectations that the US Federal Reserve could resume rate hikes soon. In response to the geopolitical escalation, money markets are pricing nearly a 35.8% chance of a Fed hike this month, and an 82.1% probability of at least a quarter-point move in September, according to CME’s FedWatch tool cited by FXStreet. FXStreet also linked the risk backdrop to actions involving Yemen’s Tehran-backed Houthis, which said it attacked two Saudi oil tankers in the Red Sea, alongside the US conducting a 13th consecutive night of strikes on Iran. US President Donald Trump warned the Houthis that the US would deliver “major military punishment” if they did so again, and he said he is considering a “massive attack” on Iran, as reported by Axios. Analysts at TD Securities, as quoted by FXStreet, said the macro and FX environment is not supportive of building long gold exposure and argued that continued Middle East war-driven oil increases raise the probability of further Fed hikes, a factor that could weigh on gold given that it does not yield.

Latest closeGold $4,051.10 ▼2.3%

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