Gold price hits two-month high, retreats after Hormuz escalation spikes oil price

Gold hit a two-month high around $4,495 per ounce on Tuesday, before falling back to $4,440, following an escalation of tensions near the Strait of Hormuz. This rise was driven by speculation of a potential deal that could reopen the vital oil route. However, a subsequent increase in oil prices pulled gold down from its peak ahead of the US inflation data, which will influence the Federal Reserve's decision on a possible interest rate hike. By midday, gold had gained 0.5%.

Spot gold was largely unchanged around $4,395, having previously surged by as much as 1%. Bullion has since recovered every dollar lost in the dip below $4,000 two weeks ago, buoyed by recent US job data contraction and central bank purchases. Silver, meanwhile, saw a gain of up to 2.2%, reaching $66.685 an ounce, its highest since June, but then reversed to $65.035, down 0.4%. It is still down about 9% in 2026, recovering from the impact of January's futures squeeze and the war-driven collapse.

Platinum remained flat, while palladium saw a slight decline of 0.9%. The market reaction was partly influenced by a report suggesting that Pakistan might agree to terms that could alleviate tensions in energy markets, potentially reducing the pressure on the Federal Reserve to increase interest rates to combat inflation. This would be favorable for gold, which does not yield interest. However, by early trading hours, the market reversed, with US crude oil prices climbing above $83 a barrel and Brent approaching $89.

President Donald Trump made a tough stance on Monday, urging Iran to pay reparations for victims of its attacks, including those linked to the Islamic Republic and domestic protests. Iran is unlikely to meet these demands. Hansen, head of commodity strategy at Saxo Bank, suggested that for gold to maintain its recent rally, it needs to stay between $4,360 and $4,370, where it had previously peaked in June. If not, some consolidation may occur, considering the persistent pressures from oil, yields, and the dollar.

Among the major gold mining companies, Agnico Eagle slightly increased by 1.2%, while Newmont dipped by 0.3%, Wheaton Precious Metals stayed unchanged, and Franco-Nevada saw a slight decline. Gold Fields declined by 2.2%, and Harmony Gold also dropped by 2.5%. Barrick Mining announced the appointment of Sebastiaan Bock as the CEO of its Rest of World division, a move following criticism over the company's $1.95 billion settlement with Newmont.

Silver prices, represented by Coeur Mining, Hecla Mining, and Pan American Silver, showed mixed performance, with gains and declines throughout the day. Overall, gold is up about 1% for 2026 and remains near a fifth below its pre-war levels in late February.