Gold prices hold gains as oil shock tests Fed path next week

Gold prices held near $4,130 an ounce as dip buyers returned, even as rising oil prices revived anxiety over US inflation and interest rates. The move kept bullion above a closely watched $4,000 level after a two-day advance of 3%.

The rally came as the US and Iran showed no readiness to resume talks after a fresh escalation in attacks. For gold traders, the immediate question is whether haven demand can offset the pressure of higher borrowing costs, which usually weakens demand for an asset that pays no yield.

Oil surge complicates Fed call

Energy prices moved to multiweek highs as the conflict threatened shipping routes and crude supply channels. Higher oil costs can feed into inflation, a risk that matters because traders are split over whether the Federal Reserve will raise interest rates at its meeting next week.

Soft US economic data has pulled in the opposite direction, giving policymakers a reason to avoid tightening too aggressively. The absence of clear forward guidance under Fed chair Kevin Warsh has added another layer of uncertainty for markets trying to price the next move.

Gold’s resilience is unusual because Treasury yields have often been the stronger signal for bullion in recent months. During much of the conflict, gold moved inversely with yields, but this week it stayed above $4,000 even as rate concerns persisted.

Red Sea risk reaches tankers

Reported strikes on tankers in the Red Sea marked the first such incidents since the conflict began in late February. Yemen’s Iran-backed Houthis claimed responsibility, raising concern that the war could spread further into trade and energy routes.

The waterway has become important for Saudi crude shipments affected by disruption around the Strait of Hormuz. If tanker risk rises, insurers, shippers and refiners may have to absorb higher costs, which can pass through to energy markets and inflation expectations.

Gold has not fully escaped the damage from the rate backdrop and earlier selling. The metal remains down by about one-fifth since the US and Israel launched strikes on Iran in late February, after a multiyear advance that took prices near $5,600 the previous month.

Dip buyers test $4,200 ceiling

Bart Melek, global head of commodity strategy at TD Securities, described gold’s recent upside as “unusual” given the jump in energy prices after the latest Middle East escalation. “This rally does not seem to be an aggressive extension of long positions, but is rather driven by short covering and dip buying, after technical supports held during the preceding selloff,” he said in a note.

Melek said the higher-rate backdrop means gold “may be destined to drop back to support at around $3,900 an ounce.” He also pointed to possible resistance near $4,200, a level that now frames the next technical test for bullion.

Spot gold was up 0.1% at $4,133.82 an ounce at 8 a.m. in Singapore. Silver was little changed at $59.75 an ounce, while platinum and palladium edged lower, showing that the latest move was concentrated most clearly in gold.

If oil prices keep climbing and the Fed leans toward another rate increase, gold could struggle as real yields and the dollar become more attractive relative to bullion. That path would tighten financial conditions globally, test support near $3,900 for gold, and pressure precious-metals traders that built positions around the $4,000 floor.

If energy markets calm and soft US data dominates the policy debate, bullion could hold its haven bid and challenge the $4,200 area. That scenario would ease some macro pressure, support gold-linked positioning, and give the wider metals market room to stabilize after a volatile stretch.