Gold experienced a significant retreat from its two-week high, with Comex gold for August delivery falling as much as 2.6% to $4,042.50 an ounce, before settling at $4,050.80, down 2.4% as of 11:45 a.m. in New York. This decline snapped a two-day rally that had seen bullion hit a two-week high of $4,165.87 on Wednesday. Silver, a more volatile precious metal, also saw a sharp drop, with its September contract falling 4.9% to $57.32 an ounce.
The primary driver of this metals downturn was a fresh escalation in the Middle East conflict, specifically Yemen’s Iran-backed Houthis targeting two Saudi oil tankers in the Red Sea, alongside continued US-Iran exchanges. This pushed oil prices up by more than 5%, nearing $100 a barrel, and caused two-year Treasury yields to rise for a sixth consecutive session. The combination of surging oil and rising yields hardened expectations that the Federal Reserve would resume interest rate hikes, with rate swaps now pricing in a one-in-three chance for next week's meeting and a full hike expected by September.
According to Bart Melek, global head of commodity strategy at TD Securities, the recent bounce in gold was largely due to "short covering and dip buying" rather than a significant build-up of new long positions. He noted that with rates rising, gold "may be destined to drop back to support at around $3,900 an ounce," while identifying resistance at $4,200. Bullion has already lost about a fifth of its value since February when the US and Israel launched strikes on Iran, ending a multiyear bull run that saw the metal reach almost $5,600 in January. Gold is currently down 6.1% for 2026, holding above the $4,000 level that some traders consider key support.
The decline in precious metals was mirrored in mining equities. Major gold miners saw their shares fall in New York morning trade: Newmont was down 1.4%, Agnico Eagle 1.8%, Barrick 1.1%, Kinross 2.2%, AngloGold Ashanti 2.4%, and Gold Fields 2.9%. Companies with significant silver exposure were hit even harder, with Coeur Mining dropping 3.3%, Pan American Silver 2.2%, and Alexco Resource Corp 2%.
