Gold is struggling to behave like a classic haven because the latest geopolitical shock is feeding the very risk that hurts bullion: higher inflation and tighter policy.
Prices slipped on Thursday after renewed US-Iran fighting pushed oil higher and revived concerns that central banks may have to stay restrictive for longer.
The metal still has support from reserve buying and global uncertainty, but the immediate trade is being dominated by the dollar, crude and Fed expectations.
Oil shock turns into a rate problem
Spot gold fell around 0.4% to near $4,060 an ounce in early trade, after touching its lowest level in more than a week.
US gold futures for August delivery also declined, extending the weakness seen after President Donald Trump said an interim agreement to end the Iran conflict was “over”.
The US military said it launched fresh strikes on Iran to keep the Strait of Hormuz open, while the latest escalation pushed oil higher.
That matters for gold because dearer crude can quickly lift inflation expectations, strengthen the dollar and push bond yields higher.
Gold is often described as an inflation hedge, but that relationship weakens when inflation forces markets to price higher interest rates.
Since bullion pays no income, it tends to struggle when cash and bonds become more attractive.
Fed anxiety keeps bulls cautious
The latest Fed minutes added to that pressure.
Policymakers expressed deeper concern that price increases were becoming broader, with some seeing a case for higher borrowing costs before the committee held rates steady in June.
That hawkish tilt helps explain why Bank of America cut its 2026 average gold forecast by 14% to $4,360 an ounce.
The bank still sees long-term upside once the tightening cycle ends, but the near-term message is more cautious: a hawkish Fed can cap gold even when geopolitics is supportive.
The IMF also lowered its 2026 global growth forecast to 3.0%, citing risks from the Middle East war, trade fragmentation and potential AI-related market corrections.
That slower-growth backdrop may eventually support gold, but it is being overshadowed for now by inflation and rate risk.
Reserve demand offers a floor
There are still structural supports.
Tanzania’s central bank has bought about 28 metric tons of gold over the past 18 months to strengthen reserves and support the shilling, a reminder that official-sector demand remains active.
Elsewhere in metals, silver eased as India’s import restrictions created shortages and pushed domestic premiums to six-month highs despite soft demand.
Spot silver fell, while platinum and palladium edged higher. The split shows that precious metals are trading less as one block and more on their own policy, supply and demand stories.
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