Gold prices maintained their gains following President Donald Trump's remarks indicating that renewed attacks on Iran would likely be brief. This helped to alleviate concerns about open-ended conflict and associated inflation, which had previously driven energy prices higher. Trump's assertion that the US controls the Strait of Hormuz also contributed to the sentiment.
Trump's comments, made on Wednesday, suggested the bombing campaign would not last "too long." This statement had an immediate impact on energy markets, with Brent crude easing slightly to just over $95 per barrel. The easing of oil prices is significant as elevated energy costs had been a primary driver of inflation concerns, influencing market expectations for central bank monetary policy.
The broader market context includes lingering geopolitical tensions in the Middle East, which have kept oil and gas prices elevated for months. These high energy prices have fueled inflation, pressuring central banks to consider higher interest rates. Gold, typically seen as a safe-haven asset, tends to climb during periods of geopolitical uncertainty and inflation fears, but also reacts to shifts in interest rate expectations. Traders are now assessing how potential de-escalation could impact funding costs and the overall economic outlook.
