Gold holds near highs as Strait of Hormuz standoff keeps markets on edge

Global commodity markets opened the week in a cautious but elevated posture on August 17, as the ongoing crisis in the Strait of Hormuz continued to underpin safe-haven demand for gold and keep oil prices elevated. Iran's position barring transit by US and Israeli military vessels through the strategic waterway has added a persistent geopolitical risk premium across energy and precious metals markets, with no resolution in sight.

Hormuz Crisis Compounds Market Uncertainty

The standoff over the Strait of Hormuz — through which roughly a quarter of the world's seaborne oil trade passes — has been a defining feature of markets throughout 2026. Iran has maintained that the waterway will not return to pre-war conditions, with its plan explicitly barring transit by US and Israeli ships, according to Reuters ↘ 2.32%. Tehran's Supreme National Security Council has demanded the withdrawal of US military forces from the region, the lifting of sanctions, and payment of war reparations as conditions for reopening the strait, CNBC reported.wikipedia+2

Gold stood near $4,374 per ounce at the start of trading on August 17, consolidating after reaching as high as $4,449 during the previous week. Brent crude ended Friday's session at $88.52 per barrel, up 1.67% for the day, as tanker traffic through Hormuz remained below normal levels. On the domestic Indian exchange, MCX gold futures gained nearly 2 percent last week, closing at Rs 1.54 lakh per 10 grams.rediff+1

Fed Policy Calculus at Stake

Analysts warn that sustained Hormuz tensions present a dual challenge for the Federal Reserve. While weaker US economic data — including disappointing July retail sales — have reduced market expectations for a September rate hike to around 33 percent, down from 55 percent a week earlier, energy-driven inflation from supply disruptions could complicate the picture.vietnam

"The US dollar, interest-rate expectations and geopolitical developments will remain the key drivers for bullion prices," said Jateen Trivedi, VP Research Analyst at LKP Securities. The Fed will release minutes from its July 28-29 FOMC meeting on August 19, which could reveal internal divisions on whether to continue tightening policy.rediff+1

No Resolution in Sight

Diplomatic efforts have stalled. Iran's foreign minister said no negotiations have been held with the United States, CNBC reported on August 15. President Trump has rejected Iran's conditions, particularly the demand for war reparations. The impasse leaves markets facing what the Vietnam.vn analysis described as "the most unpredictable variable" — any escalation or breakthrough from the Middle East could cause gold and oil to reverse course quickly.cnbc+2