Gold prices fell on Thursday after reaching a two‑week high the previous session, as a firmer U.S. dollar and soaring oil prices revived inflationary concerns and lifted U.S. Treasury yields amid expectations of Federal Reserve rate hikes. Spot gold slipped 2% to settle at $4,049.56 per ounce, while gold futures declined 2.4% to $4,052.40 per ounce, following a roughly 3% rally over Tuesday and Wednesday. The metal had earlier bounced back, supported by technical buying after repeatedly testing the psychological $4,000 per ounce level; analysts noted mild support around $4,080 and said a decisive break above $4,200 would be needed for a sustained bullish move. David Morrison, senior market analyst at Trade Nation, questioned whether the dip was merely profit‑taking or a sign of lower‑cycle lows, emphasizing the importance of the dollar’s strength.
Oil prices surged as Brent crude futures topped $100 a barrel for the first time since May 26, driven by heightened supply‑disruption worries after Iran‑backed Houthi militants claimed responsibility for strikes on two Saudi Arabian tankers in the Red Sea—the first such attacks since the militia announced a blockade on Saudi vessels earlier in the week. Kpler estimated that 1.9 million barrels per day of Saudi west‑coast refining capacity were exposed to potential missile hits. Vessel crossings through the Strait of Hormuz fell 75%, prompting more cautious shipping and greater oil accumulation in the Gulf. U.S. Central Command reported its 12th consecutive night of bombardment against Iran, while a naval blockade redirected nine commercial vessels and disabled one to prevent entry into Iranian ports; Tehran retaliated by striking U.S. bases in Kuwait, Jordan and Bahrain.
President Donald Trump criticized the Houthis, stating they had acted responsibly for a year but were now “starting up again” and warning that the United States would hold Iran responsible, with “major military punishment” if attacks continued.
The oil price jump has re‑ignited inflation concerns. The Federal Reserve is in a communication blackout this week and is expected to keep rates unchanged on July 29, but the probability of a hold has slipped to about 66% from roughly 88% a week earlier, while the odds of a quarter‑point hike have risen to nearly 34% from around 12%, according to the CME FedWatch tool. Higher‑rate environments typically pressure non‑yielding assets such as gold and strengthen the dollar, making bullion more expensive for foreign buyers.
ANZ analysts observed that investors continue rebuilding gold positions despite the prospect of elevated rates, noting that recent weakness has attracted buyers rather than triggered fresh selling. Non‑commercial net long positions in gold have climbed to their highest level since January, and inflows into gold‑backed exchange‑traded funds suggest some investors are using bullion to hedge against stretched equity valuations.