Gold falls as Iranian missile strike on Hormuz tanker boosts dollar

Iran's Revolutionary Guards fired missiles at commercial ships in the Strait of Hormuz on Monday night, badly damaging a Qatari LNG tanker, according to Reuters .reuters+1
Gold retreated after posting its first weekly gain in five weeks, as surging oil prices revived inflation fears and strengthened the dollar.cnbc+1
Investors now await the Fed's June meeting minutes, due as early as Wednesday, for signals on whether officials favor a rate hike this year.tradingview

Gold prices fell on Tuesday after a tanker was struck by a projectile in the Strait of Hormuz, reigniting energy-driven inflation fears and pushing the U.S. dollar higher against rival currencies. The attack erased gains from the prior week, when weaker U.S. employment data had lifted the precious metal to its best weekly performance since late May.

Hormuz Flare-Up Jolts Markets

Iran's Revolutionary Guards fired missiles at commercial ships transiting the Strait of Hormuz on Monday night, according to Reuters , citing Axios and two U.S. officials. A Qatari LNG tanker suffered heavy damage, though no casualties were reported. The United Kingdom Maritime Trade Operations center confirmed a tanker caught fire early Tuesday near Limah, Oman, after being hit on its port side.reuters+1

The attacks came as Iran observes a weeklong state funeral for slain Supreme Leader Ayatollah Ali Khamenei, whose coffin is being carried across the country en route to burial in Mashhad on July 9. The incident marks the latest disruption in a waterway that has been the focal point of tensions since the U.S. and Israel launched strikes on Iran in February.britannica+2

Oil prices climbed on the news, stoking concerns that energy costs could further complicate an already elevated inflation picture. The Federal Reserve noted at its June meeting that "inflation remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy".federalreserve

Gold Gives Back Weekly Gains

Gold had been trading near $4,182 on Friday and posted a 2.3% weekly gain — its first in five weeks — after a softer-than-expected June nonfarm payrolls report and reassuring comments from Fed Chair Kevin Warsh on inflation. But Tuesday's geopolitical flare-up reversed the momentum, with gold slipping below $4,130, according to Trading Economics. Silver, which had surged nearly 7% last week, and platinum both declined.cnbc+3

The stronger dollar weighed on precious metals priced in the greenback. The pattern echoed April, when Iranian attacks on vessels in the strait similarly pushed gold lower and the dollar higher as markets priced in hotter inflation from rising energy costs.wsj

Fed Minutes in Focus

Investors now turn to the release of the Federal Reserve's June meeting minutes, expected as early as Wednesday. The minutes could shed light on how aggressively officials discussed the prospect of rate hikes, after the updated dot plot showed a median projection implying one increase before year-end. Nine of 18 FOMC members indicated they expected higher rates in 2026, a hawkish tilt that has kept downward pressure on gold throughout the year. The next Fed policy meeting is scheduled for July 28-29.chase+3

Sources (54)