Gold prices moved higher in volatile trading as markets reacted to escalating geopolitical tensions following fresh remarks from Donald Trump regarding Iran and the strategic Strait of Hormuz.
Bullion rose around 0.3 to 0.6 percent, with spot gold trading at approximately US$4,660 per ounce in New York afternoon trade, as investors responded to heightened uncertainty and renewed safe haven demand.
Trump intensified his rhetoric ahead of a self imposed deadline, warning that Iran could face severe military consequences if it fails to reopen the vital shipping route. Reports from The Wall Street Journal indicated that the US military is preparing for potential strikes targeting Iranian energy infrastructure, further escalating geopolitical risk.
In response, the US dollar held relatively steady while Treasury yields edged slightly higher. Normally this would weigh on gold, but the surge in geopolitical risk and increased hedging demand helped offset those pressures, supporting prices.
During a press conference at the White House, Trump stated that Iran could be “taken out in one night,” underscoring the seriousness of the situation as the deadline approaches. Iran has rejected ceasefire proposals, instead calling for a permanent end to hostilities, removal of sanctions, and guarantees for safe passage through the Strait of Hormuz.
Safe Haven Demand Returns to the Forefront
Despite earlier weakness in recent sessions, gold is regaining traction as investors reassess risk across global markets. The renewed escalation has brought safe haven flows back into focus after a period where gold had struggled to consistently benefit from geopolitical uncertainty.
Since the broader conflict began in late February, gold has experienced sharp swings, reflecting competing forces between inflation expectations, interest rate policy, and investor liquidation pressures.
Market commentators note that while higher energy prices have fuelled inflation concerns, they have also increased demand for protective assets such as gold, particularly as uncertainty spreads across equity and bond markets.
Robert Gottlieb, a market strategist, highlighted that investors are increasingly prioritising capital preservation, with gold once again being used as a defensive hedge amid rising volatility.
Inflation Fears Intensify Ahead of US Data
Attention now turns to upcoming US inflation data, where economists are forecasting a sharp rise in the Consumer Price Index. A potential 1 percent monthly increase would mark the largest jump since 2022, driven largely by surging fuel costs linked to geopolitical disruption.
US gasoline prices have already climbed significantly, adding further inflationary pressure and complicating expectations for Federal Reserve policy. While higher inflation would typically support gold, the outlook for interest rates remains a key counterbalance.
Market Snapshot
- Spot gold: approximately US$4,660 per ounce, slightly higher on the session
- Silver, platinum and palladium: broadly mixed to slightly firmer
- US dollar index: steady with mild fluctuations
- Treasury yields: marginally higher but contained
Outlook
Gold remains caught between competing forces. Geopolitical escalation is driving safe haven demand, while interest rate uncertainty and inflation dynamics continue to influence broader sentiment.
In the near term, price action is likely to remain volatile. However, with geopolitical risks rising and inflation pressures building, gold is increasingly finding support on dips, even in the face of a relatively strong dollar and firm bond yields.
