Gold hits $4,403 as Hormuz conflict lifts safe-haven demand

Spot gold traded near $4,403.10 per ounce in early U.S. sessions. The price represented a 1.11% increase for the day. Spot silver also climbed, reaching $66.080 per ounce. This marked a 0.68% rise on the session. These gains occurred as investors sought defensive assets. The move was driven by escalating geopolitical risks in the Middle East.

Brent crude oil prices exceeded $100 per barrel. This energy spike added to inflation concerns. The U.S. dollar index softened during the same period. Lower dollar values typically support precious metals prices. Traders positioned for potential rate hikes by the Federal Reserve. Markets priced in a 60% probability of a 25-basis-point hike. This expectation weighed on risk assets but supported gold as a hedge.

Hormuz tensions drive oil and safe-haven flows

The U.S. military reported destroying five Iranian oil tankers. This followed Iranian attacks on U.S. warships. Tehran retaliated against U.S. targets in Jordan. Both nations sought control over the Strait of Hormuz. This waterway handles about one-fifth of global oil supply. The conflict pushed Brent crude to $100.72 and WTI to $95.25.

Higher energy prices elevate inflation expectations. This keeps Treasury yields elevated. The 10-year Treasury yield traded near 4.81%. This is the highest level since October 2023. Elevated yields increase the opportunity cost of holding non-yielding assets like gold. However, safe-haven demand offset this negative factor. The net effect remained constructive for precious metals in the short term.

Inflation data will test the rally's durability

The Producer Price Index is due Thursday. The Consumer Price Index is scheduled for Friday. Both releases carry significant weight this week. The oil shock has revived inflation concerns. These data points will influence Federal Reserve policy decisions. Markets await clarity on the path for interest rates. The outcome will determine if the current price rally extends or stalls.

Gold has recovered from the $4,347 support area. It is now testing the $4,422 resistance level. Silver remains compressed below $67.21. It has held above the $64.73 support level. Buyers are using geopolitical risk to defend dips. The next upside target for gold is $4,465. A break below $4,347 would signal deeper downside moves toward $4,290.

Yields and dollar weakness shape market dynamics

Global markets showed mixed sentiment ahead of the U.S. open. U.S. stock-index futures slipped as oil climbed. Treasury yields held near three-year highs. This bond move pressured rate-sensitive equities. Energy shares retained relative support. In Europe and Asia, the same oil-and-yield mix weighed on risk appetite. Traders awaited U.S. inflation data to gauge the economic outlook.