Gold slides below $4,450 as rate-hike fears offset geopolitical risk

COMEX gold futures fell 0.3% to $4,492.70 an ounce, tracking toward a weekly loss as rate-hike expectations strengthened.

"Energy analysts warn that rapid inventory drawdowns from the Strait of Hormuz closure are likely to deliver fuel price shocks, with prices across the energy complex expected to remain higher for longer," analysts at Saxo Bank said.

Spot gold traded below $4,450 an ounce, extending declines from the prior session. The precious metal has come under pressure as concerns over sustained disruptions to energy shipments through the Strait of Hormuz pushed oil prices higher, heightening inflation risks. Brent crude held near $95 a barrel, while WTI traded around $92, after both benchmarks surged more than 5% on Monday.

The dual pressure from geopolitical uncertainty and monetary policy expectations has created an unusual dynamic for gold. While Middle East tensions typically support safe-haven demand, the specific nature of the Strait of Hormuz disruption — which has choked off about a fifth of global oil and LNG flows since the conflict began — is fueling energy price inflation that strengthens the case for the Federal Reserve to maintain or raise rates. Higher interest rates are negative for non-yielding gold, offsetting its traditional safe-haven appeal.

The uncertainty surrounding U.S.-Iran peace talks has kept markets on edge. President Donald Trump said Monday that negotiations were ongoing, while Iran's Tasnim news agency reported Tehran had suspended indirect talks with Washington. Fresh military exchanges overnight, including Iranian strikes on U.S. facilities in Bahrain and Kuwait and U.S. retaliatory strikes near the Strait of Hormuz, further complicated the outlook.

Shipping traffic through the Strait of Hormuz remained severely constrained. Just two inbound commercial transits were observed Tuesday morning, following two outbound ships on Monday, according to ship-tracking data compiled by Bloomberg. Iran has effectively halted nearly all non-Iranian shipping into and out of the Gulf since the war began in late February.

U.S. crude exports climbed to a record 5.6 million barrels per day in May as the Middle East crisis pushed up demand from Asian and European refiners, ship tracking estimates showed. A preliminary Reuters poll indicated U.S. crude stockpiles likely fell by about 3.6 million barrels in the week ended May 29.

This article is for informational purposes only and does not constitute investment advice.