Gold climbed back above $4,050 an ounce in early Asian trading on Wednesday, 22 July, as investors bought bullion following its retreat towards $4,000. Persistent US-Iran hostilities supported haven demand, while tentative ceasefire efforts eased some concern that high oil prices would force faster US interest-rate increases.
Market Snapshot
Spot gold (XAU/USD) traded near $4,080 an ounce during the early Asian session, up about 1.8% on the day. The recovery followed a test of the psychologically important $4,000 level in the previous session.
During Tuesday’s global session, spot gold gained 1.6% to $4,068.29 by 1800 GMT. US gold futures for August delivery settled 1.5% higher at $4,076.40 an ounce. The metal also broke above a short-term downward trend that had been in place since 6 July.
Ewa Manthey, commodities strategist at ING, said the advance appeared to reflect renewed buying at lower prices rather than a reaction to a single geopolitical development. “Today’s move looks more like dip-buying than a response to new headlines,” she said in D-day commentary.
Conflict Sustains Haven Demand
The United States completed an 11th consecutive day of strikes against Iran, targeting military operations centres, maritime capabilities, aircraft hangars, drone storage facilities and logistics infrastructure, US Central Command said. Washington said the operations were intended to reduce Iran’s ability to threaten commercial shipping in the Strait of Hormuz.
CENTCOM said Iran had attacked more than 30 commercial vessels transiting the strait. Iranian forces also targeted US-linked sites across Bahrain, Kuwait and Jordan, while a tanker reported being struck by a projectile in Hormuz.
The conflict widened further after Yemen’s Iran-aligned Houthi movement announced a naval blockade against Saudi Arabia. Two tankers carrying Saudi crude to China and India reversed course in the Red Sea after the group threatened vessels using Saudi oil ports.
Ceasefire Hopes Support Metals
Despite the continuing attacks, investors also tracked signs of a possible diplomatic opening. A senior Iranian official said Tehran had received a proposal from mediators for a 10-day ceasefire aimed at restoring an interim agreement that collapsed earlier in July.
The prospect of de-escalation supported gold because a ceasefire could reduce pressure on energy prices and weaken expectations for tighter monetary policy. Brent crude nevertheless settled 2% higher at $91.01 a barrel on Tuesday, while US West Texas Intermediate crude rose 2% to $84.91.
“Commodities are higher across the board” on expectations that a ceasefire may be developing, Marex analyst Edward Meir said. He added that technical buying also contributed to gold’s recovery.
Interest Rates Limit Upside
Gold’s advance remained constrained by uncertainty over the Federal Reserve’s next move. High energy and transport costs could reverse part of the recent improvement in US inflation, strengthening the case for borrowing costs to remain elevated.
Traders were pricing a roughly 68% probability of a quarter-point Fed rate increase in September. However, all 104 economists surveyed by Reuters expected the central bank to leave its target range unchanged at 3.50% to 3.75% during its 28 to 29 July meeting.
Most economists also expected rates to remain unchanged through the end of 2026, although two-thirds of respondents who assessed the risk of an increase described the probability as high. Higher interest rates generally weaken demand for gold because bullion does not pay interest.
Precious Metals Advance
The recovery extended across the precious-metals complex. Spot silver rose 4.1% to $58.72 an ounce, platinum gained 1.9% to $1,623.63 and palladium advanced 2.4% to $1,282.25.
The broad move suggested investors were rebuilding exposure after recent declines, while continuing to balance geopolitical protection against the risk of tighter financial conditions.
Outlook
Traders will watch whether mediators secure the proposed 10-day ceasefire, whether attacks on commercial shipping continue and whether tanker traffic through the Strait of Hormuz and Red Sea deteriorates further.
Attention will also turn to the Federal Reserve’s July meeting and Chair Kevin Warsh’s comments on inflation. Further gains in oil, the dollar or Treasury yields could limit gold’s recovery, while diplomatic progress or renewed haven demand could support another test of the $4,100 level.
