Gold edged higher on Thursday, climbing back toward $4,600 an ounce after rebounding from one-month lows as investors weighed escalating U.S.-Iran tensions, a divided Federal Reserve, and shifting expectations for future U.S. interest rates. Spot gold rose about 1% to around $4,588 an ounce, though bullion remains on track for its second consecutive monthly decline.
The rebound came as geopolitical anxiety intensified following reports that the U.S. military is set to brief President Donald Trump on potential action against Iran, while Trump also reaffirmed that Washington would maintain its naval blockade until a nuclear agreement is secured. The continued standoff has kept markets focused on the broader implications of prolonged Middle East instability, particularly as the Strait of Hormuz remains a central pressure point for global energy markets.
Although gold traditionally benefits from geopolitical uncertainty as a safe-haven asset, the current environment has created a more complex market reaction.
Surging oil prices, driven by fears of prolonged supply disruption, are raising inflation expectations globally. That has strengthened assumptions that the U.S. Federal Reserve may need to keep rates higher for longer, reducing the attractiveness of non-yielding assets such as gold. Reuters reported that markets are no longer expecting rate cuts in 2026 and are increasingly beginning to price in the possibility of a rate hike by 2027.
The Federal Reserve on Wednesday left interest rates unchanged, as widely expected, but internal divisions became more visible, with four officials dissenting from the policy decision, an unusually high level of disagreement that underscores growing uncertainty over how the central bank should respond to inflation risks linked to energy shocks and geopolitical disruption.
The combination of war-driven inflation fears and tighter monetary expectations has created a paradox for gold: while geopolitical stress supports safe-haven demand, higher rates and a stronger dollar continue to cap upside momentum.
Analysts say this tension is increasingly defining gold’s near-term trajectory.
If Middle East tensions worsen significantly, gold could see stronger safe-haven inflows. But if oil-driven inflation continues pushing markets toward a more hawkish Fed outlook, bullion may remain under pressure despite geopolitical support.
For global investors, gold is now sitting at the intersection of two competing forces: fear-driven demand and interest-rate restraint.
Market attention is now focused on U.S.-Iran developments, oil price movements, and future Federal Reserve guidance, all of which are expected to shape whether gold resumes its broader rally or remains trapped by rising macroeconomic pressure.
