Gold rebounds from nine-week low amid Iran tensions

Traders Union
All News
Commodities
Gold rises modestly

Highlights

Spot gold rose 0.18%, while futures gained 0.14%.
Fed officials broadly expect another interest rate increase in 2026.
U.S.-Iran tensions and higher energy costs are complicating gold's recovery.

Spot gold traded at $4,118.91 an ounce, up 0.18%, while U.S. gold futures reached $4,146.60, gaining 0.14%, according to the latest market readings. Bullion had touched its lowest level since early August on Wednesday, with higher borrowing costs and a stronger dollar continuing to weigh on prices, Bloomberg reports.

Fed signals further tightening

Minutes from the Federal Reserve's September meeting showed unanimous support among all 19 policymakers for the latest rate increase. Most officials also expected another hike to be appropriate before year-end.

Interest rate futures indicate that traders see approximately a 20% probability of a further increase at the October meeting, compared with an 80% probability in December.

Higher rates generally reduce gold's appeal because the metal pays no interest. They also support the dollar, making bullion more expensive for buyers using other currencies.

The U.S. Dollar Index is showing a 0.07% gain during Thursday's trading session.

Middle East tensions complicate gold trading

Fresh security concerns emerged after a tanker was struck by projectiles off Qatar on Wednesday, an unusual incident deep inside the Persian Gulf.

Reports that Washington is considering renewed military strikes against Iranian targets added to uncertainty over regional shipping and energy infrastructure.

Although Middle Eastern oil exports have recovered toward pre-conflict levels, elevated transport costs and continuing attacks on commercial vessels remain sources of concern. A developing storm in the Gulf of Mexico has also raised questions about U.S. energy production.

Chinese buyers returned to the market following a week-long holiday, providing additional support to precious metals trading in Asia.

Inflation risks overshadow safe-haven demand

Gold remains approximately 20% below its level when the U.S.-Iran war began in late February, despite periodic demand for protection against geopolitical uncertainty.

The decline illustrates an unusual feature of the current market: conflict-related increases in energy prices have reinforced inflation expectations, encouraging tighter monetary policy rather than a sustained rally in bullion.

For investors, the next Federal Reserve decision could prove more important than temporary fluctuations in geopolitical risk. Another rate increase would reinforce the opportunity cost of holding gold, while persistent disruption to energy supplies could keep inflation concerns elevated.

Thursday's modest gains therefore suggest a market still struggling to balance demand for safety against the prospect of prolonged monetary tightening.

As we previously reported, central banks keep gold as a reserve hedge amid higher bond yields.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.