Gold prices fell on Wednesday, slipping below the $4,500 per ounce level as investors cautiously assessed prospects for a potential U.S.-Iran peace agreement while monitoring renewed tensions in the Middle East.
Spot gold declined 0.3% to around $4,494 per ounce, extending losses from the previous session and remaining nearly 15% below levels seen at the start of the conflict.
Market sentiment improved slightly after U.S. President Donald Trump said negotiations aimed at extending a ceasefire and reopening the Strait of Hormuz were continuing, while Secretary of State Marco Rubio said a final agreement could still take several days to complete.
Despite the diplomatic optimism, geopolitical tensions remained elevated.
The U.S. military said it carried out self-defense strikes in southern Iran, while Iran’s Revolutionary Guard claimed it had fired at an F-35 fighter jet and multiple drones after they allegedly entered Iranian airspace.
Investors also continued to focus on the broader inflation outlook linked to the Gulf crisis.
Although gold is traditionally considered a safe-haven asset during geopolitical uncertainty, analysts said concerns over an energy-driven inflation shock have strengthened expectations that major central banks, including the Federal Reserve, may keep interest rates higher for longer. Higher interest rates typically reduce the appeal of non-yielding assets such as gold.
The Strait of Hormuz, which handles nearly 20% of global oil and liquefied natural gas shipments, remains a key focus for financial markets as traders assess the risk of prolonged supply disruptions and their potential impact on inflation and global growth.
Other precious metals also weakened, with silver, platinum, and palladium posting declines amid cautious investor sentiment.
