Gold prices moved lower on Thursday, reversing earlier gains as the US dollar held firm amid ongoing tensions between the United States and Iran and continued disruption in the Strait of Hormuz.
Spot gold fell 0.7% to US$4,703.65 per ounce by 3:30 pm AEST (5:30 am GMT), slipping back towards the key $4,700 support level after posting a modest gain of 0.4% in the previous session.
The precious metal faced renewed pressure as the U.S. dollar consolidated its recent rebound, supported by a geopolitical stand-off that has seen peace talks between Washington and Tehran stall.
With no clear progress towards renewed negotiations, investors have gravitated towards the U.S. dollar as a safe-haven asset.
Iran’s seizure of two ships in the Strait of Hormuz, alongside the continued U.S. naval blockade of Iranian ports, has heightened uncertainty, weighing on dollar-denominated gold.
Despite the latest pullback, gold prices remain within a relatively narrow trading range, with downside pressure partially offset by expectations surrounding U.S. monetary policy.
Market participants are pricing in a possibility that the Federal Reserve could deliver at least one interest rate cut before the end of the year, with the CME Group FedWatch Tool indicating a 19.1% chance of a 25 basis point cut by December.
Geopolitical developments beyond Iran also remain in focus. Investors are monitoring prospects for an extension of the ceasefire between Israel and Lebanon, with both sides expected to engage in a new round of talks in Washington.
Reports suggest that Beirut may seek a one-month extension to the current truce, which is due to expire in the coming days, adding another layer of geopolitical uncertainty to global markets.
Looking ahead, gold traders are expected to closely track broader risk sentiment and any updates on Middle East tensions.
Preliminary purchasing managers’ indices (PMIs) from S&P Global will also be in focus as markets assess the outlook for growth and inflation.
