Hormuz Escalation Pressures Gold as $4,000 Support Comes Into Focus

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets—and may continue to in the future.

So, what kind of week has it been?

Here’s what you need to know:

1. Gold spent most of the week trading in a narrow range between $4,000 and $4,100/oz, with buyers fighting on Friday to preserve a close above the major $4,000 support level.

2. Escalating US-Iran tensions around the Strait of Hormuz pushed crude oil back toward $90 per barrel, lifting inflation expectations and weighing on gold through the prospect of higher interest rates.

3. A softer-than-expected June CPI reading offered only brief relief, while Fed Chair Kevin Warsh’s first semiannual testimony reinforced a more hawkish outlook for monetary policy.

4. Next week’s light macroeconomic calendar leaves gold largely exposed to geopolitical headlines, shifting rate expectations, and thinner summer market depth.

So, What Kind of a Week Has It Been?

Gold spot prices on Friday are putting up a fight to close above $4,000/oz, a major psychological and technical line of support. That follows a week in which the yellow metal spent most of its time trying to consolidate reliable buying interest within a narrow band between $4,000 and $4,100/oz, notwithstanding a couple of worrying but brief breaks into the $3,900s. Although some of this week’s macroeconomic data, on its face, should have argued against the potential Fed interest rate hikes that are spooking gold investors, the dominant narrative developments made those hikes appear much more reasonable—although still far from certain—for the US central bank to consider.

Hormuz Escalation Revives Inflation and Rate-Hike Fears

Monday’s initial selloff in gold was driven by a further escalation of US and Iranian strikes centered around the Strait of Hormuz, both physically and diplomatically. Spot prices have not recovered to trade above $4,100/oz since Sunday night’s overseas session, thanks in large part to the US-Iran conflict deteriorating and destabilizing to the point that the US executive first threatened aggressive tolling of the passage through which 20% of the world’s oil production travels, then walked back that proclamation shortly afterward, only to effectively threaten bombing civilian targets in Iran.

As a result, crude oil prices have pushed back toward $90 per barrel, raising global inflation expectations enough for the near to medium term to reinforce the prospect of a long wait for lower interest rates. The move has likely also increased expectations that the FOMC could raise rates before the end of 2026. That shift toward a more difficult environment for gold as a non-yielding asset, because of the implied opportunity costs, has renewed downside pressure on precious metals pricing. Gold has traded as low as $3,975/oz in spot markets this week, while Friday’s rally, as of midday, has lifted prices only as high as $4,015/oz.

Soft CPI Fades as Warsh Reinforces a Hawkish Fed Outlook

Direct messaging about US monetary policy has also been broadly bearish for gold this week, despite a June CPI report that showed a steeper annualized slowdown than projected, at +2.6% versus +2.8% expected. After the initial post-CPI trading calmed, markets generally appeared to write off the inflation data as a blip. The disinflation reflected in the monthly headline CPI number could be attributed almost entirely to the sharp decline in oil prices during the brief—and now ended—period in which the US and Iran appeared to be moving closer to a long-term end to hostilities.

Adding a more deeply hawkish tint to the monetary policy picture was recently installed Fed Chair Kevin Warsh. During his first semiannual testimony before Congress, Warsh outlined plans for the Fed to respond more directly to incoming data and rely much less on accommodative forward guidance. The Chair’s commentary encouraged another repricing in Fed Funds futures, implying a further rise in the likelihood that the FOMC’s next move will be to raise rates.

Looking Ahead

Next week, we expect gold to remain largely under the influence of these narratives, given the very light macroeconomic data calendar. We are also preparing to contend with lighter market depth over the next few weeks as summer vacations come thick and fast and markets move into the dog days of late July and August.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.