FX.co ★ Gold Near Eight-Month Low as Oil Rally Lifts Rate Hike Bets

Gold prices declined toward $4,000 an ounce on Thursday, nearing their lowest level since November 2025, as rising tensions in the Middle East pushed oil prices higher and reinforced expectations that interest rates could stay elevated. The latest flare-up followed new US strikes on Iranian military targets and Tehran’s retaliatory attacks on US bases in neighboring countries, stoking fears over the security of the Strait of Hormuz and lifting crude oil prices to one-month highs.

The rise in energy costs has bolstered the view that the Federal Reserve may need to maintain a tighter monetary stance for an extended period, undermining the appeal of non-yielding assets such as gold. Traders now assign roughly a 51% probability to a rate hike in September. At the same time, softer-than-expected US inflation data released this week has largely taken a July move off the table, even as Fed Chair Kevin Warsh reiterated his determination to bring inflation back under control.