Gold tops $4,170 as US-Iran strikes drive safe-haven demand
Escalating US-Iran military strikes pushed Comex gold above $4,170 and silver past $61, as safe-haven demand overshadowed rising expectations for a September Federal Reserve rate hike.
Comex gold futures surged $95 to an intraday high of $4,171 on Wednesday, building on a $60 gain from the previous session. This pushed the yellow metal's weekly gain to 3.4%, putting it on track for the largest weekly advance in nearly two months. Silver futures simultaneously climbed $2.16 to $61.70, marking a fourth consecutive session of gains and a 7.45% weekly advance that would be its strongest since late February.
The primary catalyst for this capital rotation into precious metals is an intensifying military conflict between the United States and Iran, now entering its 11th day. The US launched fresh strikes on Iranian territory, while Tehran responded with escalated missile and drone attacks specifically targeting key Gulf nations, including Bahrain and Kuwait.
Diplomatic off-ramps appear increasingly blocked. US President Donald Trump stated Washington has "no interest in meeting" with Iranian leadership, warning that the US would strike Iranian bridges and power plants whenever Iran targets ships in the Strait of Hormuz. Iran countered by threatening to attack US-linked energy facilities across the region, while US Secretary of State Marco Rubio accused Tehran of failing to honour previous commitments.
For institutional investors, the specific threat to the Strait of Hormuz represents a critical escalation beyond typical regional skirmishes. The waterway is a vital artery for global energy supplies, meaning any sustained disruption to tanker traffic would likely force a sharp repricing of oil. Such a shock would complicate the inflation trajectory just as central banks attempt to stabilize prices.
This geopolitical premium is layering on top of existing monetary policy tightening expectations. The Federal Reserve is widely expected to hold interest rates steady at its two-day policy meeting next week. However, the market is pricing in a roughly 68% probability of a rate hike at the September meeting, a view reinforced by Fed Chair Kevin Warsh and other officials who have recently reiterated that inflation remains a key concern.
Despite these hawkish rate expectations, the US dollar index traded flat around 101.1, reflecting how bullion flows are currently overpowering currency dynamics. The domestic Indian market tracked these global movements closely. MCX gold futures climbed ₹3,117 per 10 grams to an intraday high of ₹1,46,000, gaining roughly ₹3,179 for July to turn positive for the month. MCX silver futures surged ₹5,205 per kg to ₹2,28,984, trimming its monthly deficit to less than 1%.
