Gold Falls Below $4,710 as Hormuz Closes and US CPI Surge
Gold prices fell below $4,710 per ounce on Tuesday (May 12th) amid growing Middle East uncertainty and the prolonged closure of the Strait of Hormuz, which pushed oil prices higher. This situation kept the market focused on inflation risks, while reducing gold's appeal despite rising geopolitical tensions.
Additional pressure came from the strengthening US dollar, which weighed on bullion. A stronger greenback typically makes gold more expensive for buyers outside the US, so demand tends to weaken when the dollar strengthens during risk pricing.
From a geopolitical perspective, US President Donald Trump called the US-Iran ceasefire on "massive life support" after rejecting Tehran's latest peace proposal. The market assessed the risk of the Strait of Hormuz blockade lasting longer, especially with reports that Trump would meet with his national security team to discuss the potential resumption of military operations and review plans for escorting commercial vessels through the strait.
On the macro front, US inflation rose to 3.8% in April (the highest since May 2023), and core inflation also beat expectations at 2.8%. The combination of high oil prices and hot inflation data complicates the Federal Reserve's policy path, increasing the probability of a repricing toward additional tightening scenarios, including a possible 25 basis point hike in December—making real interest rates and the dollar key variables continuing to pressure gold.
Source: newsmaker.id
