Gold prices declined on Wednesday after U.S. President Donald Trump said the interim peace framework between the United States and Iran had effectively come to an end, prompting a rally in oil prices and renewing concerns over global inflation.
By 09:36 GMT, spot gold had fallen 1.2% to $4,057.09 an ounce, while gold futures were down 2.2% at $4,066.56 an ounce.
Geopolitical Tensions Pressure Bullion
Speaking during the NATO summit in Turkey, Trump questioned Iran’s commitment to the agreement and suggested diplomatic efforts had failed.
“We make a deal, and everyone’s agreed. No nuclear weapons. We make a deal. They go outside, talk to the press, they say we never even talked about it. There’s something wrong with them. They’re cuckoo. As far as I’m concerned, it’s over,” Trump said.
Earlier in the day, Iran said it had launched attacks on U.S. military facilities in Kuwait and Bahrain in response to American military operations inside Iran and Washington’s decision to withdraw a sanctions waiver on Iranian oil exports.
Iran’s Islamic Revolutionary Guard Corps said it had struck 85 U.S. military targets and shot down an MQ-9 drone. Meanwhile, the Pentagon said U.S. forces had carried out strikes against more than 80 targets in Iran and over 60 IRGC vessels following attacks on commercial shipping in the Strait of Hormuz.
Although Iran has not claimed responsibility for Tuesday’s attacks on commercial vessels near Oman, the renewed conflict has unsettled financial markets.
Inflation Outlook Takes Centre Stage
The rebound in crude oil prices has revived concerns that higher energy costs could feed into inflation, potentially influencing future monetary policy decisions.
According to Britannia Global Markets, expectations of another Federal Reserve rate increase had eased following weaker U.S. employment data last week but have strengthened again as geopolitical tensions intensified.
Higher interest rates generally reduce demand for non-yielding assets such as gold, while a stronger U.S. dollar can also limit buying interest by making bullion more expensive internationally.
Investors Await Fed Minutes
Market participants are now focused on the publication of the Federal Reserve’s June meeting minutes.
Although policymakers left interest rates unchanged at 3.5% to 3.75%, several members projected that additional rate increases may be appropriate during 2026.
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