Gold Slides Below $4,000 Amid Iran Tensions

Gold Slides Below $4,000 Amid Iran Tensions

At 01:52 ET (05:52 GMT) the spot gold price (XAU/USD) slipped 0.14% to $3,995.64 an ounce, while gold futures fell 0.09% to $4,002.05. The metal had tumbled nearly 3% on Monday, briefly breaching the $4,000‑per‑ounce level for the first time in three weeks.

The latest sell‑off was triggered by escalating Middle‑East tensions. President Donald Trump announced that the United States would reinstate its blockade of Iranian shipping in the Gulf, declared Washington the “Guardian of the Hormuz Strait,” and proposed a 20% fee on cargoes transiting the strategic waterway. This sharp escalation raised doubts about the durability of the truce reached in June and revived concerns that renewed supply disruptions could lift crude oil prices, thereby adding upward pressure on global inflation.

Federal Reserve Governor Christopher Waller added to the bearish sentiment for gold by stating that policymakers may need to raise interest rates in the near term if underlying inflation continues to point to broad‑based price pressures. Following his remarks, markets are now pricing a 43% probability of a rate hike at the Fed’s July 28‑29 policy meeting.

Higher borrowing costs typically reduce the appeal of non‑yielding assets such as gold by increasing the opportunity cost of holding bullion, while also supporting Treasury yields and the U.S. dollar.

Investors are awaiting the release of June U.S. consumer price index (CPI) data later in the day and Federal Reserve Chair Kevin Warsh’s congressional testimony later Tuesday, both of which are expected to shape expectations for the Fed’s future interest‑rate trajectory.