Gold rises to $4,124 as US strikes on Iran revive safe-haven demand

Spot gold climbed to $4,124.21 an ounce as US military strikes on Iran rekindled safe-haven demand, while the PBOC's continued purchases reinforced a medium-term demand floor.

Spot gold rose 0.5% to $4,124.21 an ounce in early Asian trading Wednesday, as the US launched retaliatory strikes on Iran after attacks on three commercial vessels in the Strait of Hormuz. The metal remains 7% below its all-time high of $5,595.42 set in late January, according to FirstSquawk data.

"The PBOC extended its gold-buying streak into June as de-dollarization discussions continue, showing sustained official-sector demand," Sherilyn Chew, multiasset strategist at DBS Group Research, said. "Hong Kong's launch of a gold clearing infrastructure trial reinforces the broader theme of sustained Asian interest in gold and should help deepen market accessibility across the region over time."

US Central Command said it struck more than 80 Iranian targets Tuesday, including air defenses, radar sites and anti-ship missile sites, after Iran attacked three tankers transiting the Strait of Hormuz. Brent crude jumped 5.5% to just under $76 a barrel on supply disruption fears, while gold's gain was capped by a stronger US dollar as markets priced in the Federal Reserve's hawkish stance. Spot gold traded at $4,113.45 earlier in the session before paring losses, according to DBS.

Gold is approaching a critical support level around $4,000, with analysts monitoring for any further declines that could trigger a test of that floor. The probability of reaching $4,600 in July stands at 6%, according to prediction market data. The Federal Open Market Committee minutes due Wednesday could offer further insight into the rate path, with Julius Baer seeing room for gold to regain ground if the Fed refrains from raising rates and the dollar weakens.

PBOC Buying and Asian Demand Provide a Floor

The People's Bank of China extended its gold purchases into June, marking a continued accumulation streak that reflects de-dollarization trends among central banks. Hong Kong's launch of a gold clearing infrastructure trial is expected to deepen market accessibility across Asia, according to DBS. Both developments support a medium-term demand floor for gold, Chew said.

Geopolitical Risk and the Fed Factor

The US-Iran ceasefire, formalized in a 14-point memorandum of understanding in mid-June, has frayed after Iran's attacks on the Saudi-flagged Wedyan and the Qatari LNG tanker Al-Rekayat. The US revoked a sanctions waiver allowing Iranian oil sales, and Iran's foreign ministry accused Washington of violating the deal. Markets now face dual risk: further escalation in the Strait of Hormuz and the potential for higher interest rates if oil-driven inflation pressures the Fed.

This article is for informational purposes only and does not constitute investment advice.