Gold Retreats as Hormuz Conflict Escalates Energy and Inflation Fears

Gold prices retreated in early trading, falling to approximately $4,780 per ounce as military tensions spiked in the Strait of Hormuz. The price drop effectively erased the majority of the 1.7% gain recorded during the previous week, reflecting a sudden shift in market sentiment. The volatility follows an announcement by President Donald Trump that the US Navy fired upon and seized an Iranian-flagged cargo ship. This action comes amidst more than seven weeks of ongoing conflict in the Middle East, further destabilizing a region critical to global oil transit and energy security. In response to the US action, Tehran issued warnings that any vessels approaching the strait would be treated as violators of a ceasefire. This contradiction followed earlier claims from the Islamic Republic that the waterway remained open, leading several vessels to abandon their crossings only hours after the announcement. The market reaction reflects a complex interplay between geopolitical risk and macroeconomic fear. While gold often acts as a safe haven during conflict, the renewed threat of energy-supply disruptions is stoking inflation concerns. Traders are weighing the risk of a supply shock that could drive prices higher and potentially force central banks to maintain a more hawkish stance, thereby pressuring non-yielding assets like bullion.