Gold Slides to Two-Week Low as Oil Surges on Mideast Tensions, Inflation Fears Trump Safe-Haven Bid

Wednesday (July 8) — Gold prices slumped as President Trump declared the interim deal aimed at ending the conflict with Iran “over,” abruptly escalating Middle East tensions. Crude surged more than 5%, amplifying inflation concerns and sapping the metal’s safe-haven appeal.^{[Reuters via Kitco]} Spot gold settled at $4,072.69/oz, down 0.8% from the prior day and touching its lowest level since July 2 intraday. U.S. gold futures for August delivery fell 1.8% to close at $4,083.20/oz.^{[Reuters via Kitco]} U.S. equity markets were closed for the overnight session at press time, so no real-time quotes are available.

Trump Declares Iran Deal ‘Over,’ Middle East Conflict Reignites

The selloff began with Trump’s remarks at the NATO summit in Ankara. According to analysts cited by Kitco, Trump declared the interim deal to end the conflict with Iran “over,” adding that he no longer wishes to engage with Tehran — effectively dismantling a memorandum of understanding signed just weeks earlier.^{[Kitco Commentaries]} Iran then claimed it struck U.S. military targets in Bahrain and Kuwait in retaliation for earlier U.S. strikes on Iranian assets — themselves a response to attacks on tankers in the Strait of Hormuz.^{[Reuters via Kitco]} U.S. Central Command had previously said it conducted “a series of powerful strikes” against Iran in retaliation for attacks on three commercial vessels.^[CNBC]

“The main driver today is the escalation in U.S.-Iran tensions — the potential ceasefire is off the table, and we’re seeing risk assets sell off across the board, gold included,” said David Meger, director of metals trading at High Ridge Futures.^{[Reuters via Kitco]}

Oil Surge Inverts Safe-Haven Logic, Inflation Fears Weigh on Gold

Geopolitical risk did not boost gold as traditional logic would suggest; instead, it pressured the metal through the energy channel. Crude surged more than 5% to a two-week high, while the dollar index firmed to its strongest in about a week as traders bet the standoff would keep energy costs and inflation elevated for longer.^{[Kitco Commentaries]} Analysts noted that under the current market regime, geopolitical fear no longer flows directly into gold — it first hits crude, then feeds into inflation expectations, and ultimately influences Fed policy. By the time it reaches gold, the tailwind has turned into a headwind.^{[Kitco Commentaries]}

“I think the reality is that the Fed remains very focused on controlling inflation — so ‘higher for longer’ still looks like the most likely path,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.^{[Reuters via Kitco]} While gold is often viewed as an inflation hedge, the appeal of the non-yielding metal tends to fade in a high-rate environment.^{[Reuters via Kitco]}

Fed Minutes Reveal Deep Split, Rate Path Still Murky

The Fed’s June meeting minutes, released the same day, offered no clear direction. According to Kitco, the minutes — from the first FOMC meeting chaired by new Chair Kevin Warsh — devoted little ink to what the summary described as a “family fight” over policy direction.^{[Kitco Commentaries]} Among the 18 policymakers who submitted year-end rate forecasts, nine expected at least one hike, eight favored holding steady, and one leaned toward a cut — a near-even split on further tightening.^{[Kitco Commentaries]} Warsh himself did not submit a forecast, making him the first sitting chair to do so since the Fed began publishing the “dot plot” in 2012.^{[Kitco Commentaries]}

The minutes cited tariffs, rising energy costs, and ongoing disruption from the closure of the Strait of Hormuz as factors keeping inflation elevated in the near term, with risks still tilted to the upside.^{[Kitco Commentaries]} According to the CME FedWatch Tool, traders now price in roughly a 67% probability of a September rate hike, up from 62% on Tuesday.^{[Reuters via Kitco]}

‘Death Cross’ Confirmed, but Central Bank Buying Offers Structural Support

On the technical side, gold’s 50-day moving average crossed below its 200-day moving average on June 30, confirming a “death cross” — a warning signal that chart watchers view as a clear sign momentum has turned bearish.^{[Kitco Commentaries]} The signal followed a May 11 cross of the 50-day below the 100-day moving average, reinforcing the bearish trend.^{[Kitco Commentaries]}

Not all signals point the same way, however. The People’s Bank of China increased its gold reserves to 75.44 million ounces in June, up 480,000 ounces from 74.96 million in May — the largest monthly increase in over 2½ years — indicating that official-sector buying continued during the price pullback.^{[Kitco Commentaries]} This marks the 20th consecutive month of PBOC gold purchases.^{[Reuters via Kitco]} Separately, Hong Kong launched a central gold clearing system on Tuesday and resumed gold futures trading, aiming to position itself as a regional gold reserve hub.^{[Kitco Commentaries]}

Looking ahead, Bank of America in a Tuesday report cut its 2026 average gold price forecast by 14% to $4,360, citing a more hawkish Fed, but still sees the metal reaching $5,000 once the tightening cycle ends.^{[Reuters via Kitco]}

Among other precious metals, spot silver fell 2.42% to $58.5681/oz, platinum dropped 3.6% to $1,582.13, and palladium slid 4.3% to $1,221.97.^{[Reuters via Kitco]}

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