Gold prices edged higher during Thursday’s Asian session, attempting to stabilise after falling to monthly lows yesterday, although gains remained limited as investors favoured the United States dollar amid rising inflation concerns and a hawkish Federal Reserve stance.
Spot gold rose 0.4% to $4,563.22 per ounce by 3:35 pm AEST (5:35 am GMT), recovering modestly from earlier lows near $4,510.
Ongoing geopolitical tensions between the United States and Iran, particularly surrounding the Strait of Hormuz, have driven a surge in oil prices, intensifying concerns about inflation.
Higher energy costs are reinforcing expectations that global price pressures could remain elevated for longer.
At the same time, risk-averse conditions have supported demand for the U.S. dollar, which typically moves inversely to gold, limiting the precious metal’s upside.
Axios reported that U.S. President Donald Trump reaffirmed the continuation of a naval blockade of Iran until an agreement is reached regarding Tehran’s nuclear programme.
In response, Iran warned of "unprecedented military action" if the blockade persists.
Additional reports suggested that U.S. Central Command is preparing contingency plans for targeted strikes on Iranian infrastructure, further heightening geopolitical uncertainty.
Monetary policy developments have also weighed on gold. The Federal Reserve held interest rates steady in its latest meeting, in a decision that was widely expected but notable for its level of internal disagreement.
The policy outcome marked the most divided vote since 1992 amid growing concerns among officials about persistent inflation.
The hawkish tone of dissenting policymakers, particularly regarding communication around future rate cuts, has prompted markets to reassess expectations. Traders are increasingly scaling back bets on rate cuts this year, with futures markets now indicating a roughly 31.9% probability of a rate hike by March 2027, up sharply from about 5% just a day earlier, according to the CME Group FedWatch Tool.
Looking ahead, gold prices may remain in a consolidative range as investors await a series of key economic and central bank developments. Policy decisions from the Bank of England and the European Central Bank are due later in the day, alongside the release of U.S. first-quarter gross domestic product (GDP) data and the personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation.
