Gold edges higher as Hormuz tensions escalate, bond yields limit gains

Gold recovers slightly from one-month low

Spot gold was last up 0.4% at $4,539.75 an ounce by 22:13 ET (02:13 GMT), while U.S. gold futures for June delivery rose 0.3% to $4,548.10. This modest uptick followed a decline of more than 2% in the previous session, which pushed prices to their lowest level since late March.

Despite the latest move higher, gold has struggled to regain sustained upward momentum. Prices are down over 10% since the current conflict began in late February, as persistent inflation and expectations of higher interest rates have offset safe-haven demand.

Gulf conflict and market reaction

Prices remained under pressure amid renewed conflict between the U.S. and Iran, with markets closely watching developments in the Gulf. The two sides launched new attacks on Monday over control of the Strait of Hormuz, a key chokepoint for global energy flows, breaking a fragile truce.

The U.S. military reported it had destroyed six small Iranian attack boats during engagements in the strait. Iran expanded the conflict by striking the United Arab Emirates, where a key oil facility at Fujairah port was set ablaze following missile and drone attacks.

The escalation followed U.S. President Donald Trump's "Project Freedom" initiative, which aims to escort vessels and reopen shipping lanes through Hormuz. While the initiative has raised some hopes of easing supply disruptions, uncertainty over the potential for further military escalation continues.

The intensifying conflict has increased fears of prolonged instability in the Gulf, a factor that typically supports gold. However, the metal’s gains have been limited by a surge in oil prices, which has heightened inflation concerns and driven global bond yields higher, reducing the relative appeal of non-yielding assets such as bullion.

Among other precious metals, silver prices rose 0.4% to $72.99 per ounce, while platinum climbed 1.4% to $1,973.75 per ounce.

FAQ

Why did gold prices rise in Asian trading on Tuesday?
Gold prices rose 0.4% in Asian trading as investors reacted to escalating tensions between the U.S. and Iran in the Strait of Hormuz, which increased geopolitical risk and supported demand for safe-haven assets.

What is limiting gold’s upside despite the Gulf conflict?
Gold’s gains are being capped by surging oil prices, which have intensified inflation concerns and pushed global bond yields higher, reducing the attractiveness of non-yielding assets like gold.

How has gold performed since the conflict began in late February?
Gold prices are down more than 10% since the conflict started in late February, as persistent inflation and higher interest rate expectations have outweighed safe-haven buying.

How did other precious metals trade?
Silver rose 0.4% to $72.99 per ounce, while platinum gained 1.4% to $1,973.75 per ounce.