Gold Falls Amid New Hormuz Tensions
Gold prices weakened on Monday (May 4) in thin trading, after the U.S. dollar strengthened and oil prices surged amid concerns of renewed tensions in the Middle East. The main pressure came from the rising risk of energy supply disruptions, which has again altered global inflation expectations.
Iran said its navy had forced an “enemy” warship to turn back as it attempted to pass through the Strait of Hormuz after a “swift and firm warning,” according to a Reuters report citing Iranian state television. Reuters said the report could not immediately be confirmed, while U.S. Central Command said no U.S. Navy vessels were hit.
The situation escalated after U.S. President Donald Trump said the U.S. would begin “guiding” ships stranded by the effective closure of the Strait of Hormuz. The Iranian military subsequently warned U.S. forces against entering the strait and asserted that commercial vessels should not move without the approval of the Iranian armed forces. Trump also unveiled a plan he called “Project Freedom” to help reopen shipping through the strait, although operational details were limited.
The Associated Press reported that a U.S.-led maritime information center established an “enhanced security area” south of traditional shipping routes. The normal route through the strait is considered "extremely dangerous" due to the presence of sea mines, which are said to have not been fully surveyed and mitigated. At the same time, Brent has surged again above US$110 per barrel, reinforcing concerns that high energy costs will drive inflation in various countries.
For gold, the transmission path comes from a combination of a stronger dollar and expectations of tighter interest rates. Rising oil prices increase the risk of inflation, which could prompt central banks to adopt a more hawkish stance—a condition that typically puts pressure on gold because it offers no yield. A stronger dollar also adds to the burden by making gold more expensive for buyers outside the US.
Source: Newsmaker.id
