Gold prices held their gains, trading around $4,385 an ounce, after rebounding 1% the previous day. This rebound snapped a three-day decline for bullion. The stability in gold prices followed US President Donald Trump's comments that military action in the Middle East would likely not be prolonged. These remarks helped to ease inflationary concerns that had been driven by a fresh spike in energy prices.
The rally in oil prices also slowed after Trump's statements. The renewed fighting in the region had earlier reignited fears of an open-ended conflict, which would typically fuel inflation. Such inflationary pressures are generally a headwind for non-yielding assets like gold, so the easing of these fears provided support for bullion.
Trump reiterated his claim that the US controls the crucial Strait of Hormuz. When asked on Wednesday about the potential duration of the bombing campaign, he told reporters, "I don’t think too long." Following these comments, Brent crude eased slightly to just over $95 a barrel. The US had resumed airstrikes on Iran on Sunday and conducted additional strikes on Tuesday, targeting newly established military equipment along the Strait of Hormuz, including radar and missile systems.
