Gold prices edge up from five-week lows as Hormuz tensions rise

Gold prices edged up in Asian trade after slipping to five-week lows, with investors weighing renewed tensions around the Strait of Hormuz alongside shifting inflation expectations. The metal’s short-term moves reflect a tug-of-war between safe-haven demand and the cost of holding a non-yielding asset.

How the story developed: Reuters reported spot gold was up about 0.2% at $4,528.99 an ounce as of 00:59 GMT, having fallen more than 2% in the previous session to its lowest since March 31; U.S. June gold futures also saw modest gains. The rise in geopolitical risk followed new U.S.-Iran engagements in the Gulf, including U.S. military actions against Iranian small boats and interceptions of missiles and drones, which stirred oil-market jitters.

Market impact has been mixed: higher oil and the prospect of renewed inflationary pressure tend to support gold, but firmer U.S. Treasury yields and a stronger dollar raise the opportunity cost of holding bullion and can limit upside. Major gold-backed ETF holdings remained broadly steady, which dampened a stronger physical-driven rally. This dynamic has left gold trading in a narrow band despite episodic spikes in risk appetite.

In the wider economic context, disruptions to shipping through the Strait of Hormuz directly affect global energy markets and feed into inflation and central bank policy considerations. If energy-driven inflation persists, central banks may keep policy rates higher for longer, a scenario that is generally bearish for gold. Conversely, any sustained escalation that materially boosts safe-haven flows could underpin gold prices.

Analysts say the near-term path for gold hinges on two variables: the trajectory of Middle East tensions and the direction of real yields. A further deterioration in regional security could provide intermittent support, but sustained upside would likely require a retreat in real yields or a prolonged risk-off shift among investors. Market participants are watching shipping lanes, oil moves and U.S. yield trends closely for clues to the next leg in gold’s price action.