Gold Prices Ease on Inflation Worries and Iran War Fallout Clouding US Rate Outlook

Gold prices have edged lower in thin trading today, as persistent inflation concerns linked to the ongoing Iran war continued to cloud expectations for US monetary policy, limiting the appeal of the non-yielding asset.

According to a Reuters, spot gold fell 0.2 percent to $4,606.38 per ounce by 0307 GMT, while US gold futures for June delivery dropped 0.6 percent to $4,617.40. Trading activity remained subdued, with major markets in China, Japan and the United Kingdom closed for public holidays.

The decline follows hawkish signals from the US Federal Reserve last week, where dissenting voices pushed back against further easing of monetary policy. Federal Reserve Chair Jerome Powell concluded his eight-year term on Wednesday with interest rates held steady amid rising concerns over inflation driven by elevated oil prices.

Informed observers note that the oil price shock stemming from the Iran conflict has reinforced expectations that the central bank may need to maintain higher borrowing costs for longer. This environment typically pressures gold, as investors shift toward assets offering yields, such as Treasury securities.

“Gold is still feeling the lingering effects of last week’s hawkish Fed messaging, particularly the notable dissenting voices pushing back against further easing,” said Tim Waterer, chief market analyst at KCM Trade. Waterer added that increasing oil prices could encourage central banks to hold rates higher for longer, weighing on non-yielding assets like gold.

He projected that gold would largely trade in a $4,400 to $5,500 per ounce range by the end of the year, with the upper end requiring a durable reduction in Middle East tensions and easing inflation pressures. Persistent high oil prices, he said, would likely keep the metal toward the lower half of that range.

Oil prices eased slightly but remained above $100 per barrel, with uncertainty surrounding a potential US-Iran peace deal keeping markets on edge. A tanker was reportedly hit by unknown projectiles in the Strait of Hormuz, according to a maritime security organisation, shortly after President Donald Trump announced that the United States would assist in freeing ships stranded in the Gulf due to the conflict.

Iranian state media reported that Washington had conveyed its response to Iran’s 14-point proposal via Pakistan, and that Tehran was reviewing it. These developments have kept geopolitical risks elevated, supporting some safe-haven demand for gold even as inflation worries cap gains.

The precious metals complex showed mixed movements. Spot silver rose 0.5 percent to $75.69 per ounce, platinum gained 0.8 percent to $2,003.90, and palladium increased 0.5 percent to $1,532.87.

Any breakthrough that eases tensions in the Gulf could reduce safe-haven demand for gold, while prolonged conflict and higher oil prices may provide underlying support. As trading volumes remain light due to holidays, observers expect more decisive movements once major financial centres reopen.

For now, the metal is navigating a delicate balance between supportive geopolitical risks and restrictive monetary policy signals. The latest price action comes amid broader uncertainty in global markets. Investors continue to assess the combined impact of the Iran conflict on energy supplies and the Federal Reserve’s evolving policy stance as it transitions to new leadership.