Spot gold fell 0.4% to $4,060.46 per ounce on Thursday, hovering near a one-week low after the US military launched fresh strikes on Iran to keep the Strait of Hormuz open. The escalation, which triggered Iranian attacks on Kuwait and Bahrain, drove oil prices higher and reignited concerns that persistent inflation will force the Federal Reserve to maintain a restrictive stance for longer. US gold futures for August delivery retreated 0.3% to $4,069.80.

The mechanism weighing on bullion is a rapid repricing of US rate expectations. Kelvin Wong, senior market analyst at OANDA, said the catalyst for gold’s decline is the market reassessing the likelihood of a second Fed rate hike arriving as early as the first quarter of next year. The CME FedWatch tool now shows a 68% probability of a hike in September and an 87% chance of an increase in January 2027. Higher interest rates diminish the appeal of non-yielding assets, and Bank of America cut its 2026 average gold forecast by 14% to $4,360 an ounce, citing a more hawkish central bank.

In Tehran, domestic gold coin prices moved in the opposite direction, with the Emami coin rising to 181 million tomans, reflecting local currency pressures rather than the global spot trend. Silver tracked gold lower, falling 0.9% to $57.77 per ounce, while platinum and palladium each gained 0.8%, to $1,591.13 and $1,223.95 respectively. Oil prices extended their advance, compounding the inflation narrative that is driving the rate repricing.

Investors now turn to the minutes of the Federal Reserve’s June policy meeting, due later on Thursday, for further signals on the rate trajectory. The record is expected to show mounting concern among officials over broadening price increases. With the interim US-Iran ceasefire on shaky ground, analysts in London note that the situation could turn fluid again, keeping energy supply risks and inflation expectations at the centre of market attention.