Precious Metals Wrap: Iran Considers Banning 'Hostile' Ships from Strait of Hormuz, Gold Reverses Gains

Spot gold prices reversed earlier gains to close nearly flat on Thursday (6th), as reports emerged that Iran was considering restricting 'hostile' ships from passing through the Strait of Hormuz, pushing up oil prices and reigniting interest rate hike expectations.

Spot gold held steady at $4,244.29 per ounce—the same level as its intraday high and the highest since June 18. The previous day, Wednesday, spot gold surged over 4%, marking its largest daily gain since February.

December-delivery gold futures dipped 0.1% to settle at $4,299.60 per ounce.

Iranian semi-official media outlet Fars cited a parliamentarian stating that an Iranian parliamentary committee is reviewing a preliminary bill to ban ships from the United States, Israel, and other countries deemed 'hostile' from transiting the Strait of Hormuz. Oil prices jumped more than $3 following the report.

Jim Wyckoff, market analyst at American Gold Exchange, said, "The proposed legislation from Iran is already affecting markets because rising crude prices would increase inflationary pressures."

Higher energy costs raise business expenses, and manufacturers often pass these costs onto consumers, further fueling overall inflation. This could prompt central banks worldwide to maintain a "higher for longer" interest rate policy to curb price pressures.

Bob Haberkorn, senior market strategist at StoneX, noted, "The Federal Reserve's (Fed) policy outlook remains the primary driver for gold prices. Friday's U.S. non-farm payrolls report will shape the Fed's stance on interest rate policy."

According to the CME's FedWatch tool, traders currently estimate a 57% chance of a rate hike at the September meeting and an 84% chance by the December meeting. Higher interest rates typically weigh on gold, as they increase the opportunity cost of holding non-yielding assets like gold.

"Yesterday, some money that had been on the sidelines started flowing back into the gold market after key technical levels were breached," Haberkorn said.

Gold remains about 24% below its all-time high of $5,594.82 per ounce set in late January.

Other Precious Metals Trading

Spot silver fell 0.9% to $61.54 per ounce.

Spot platinum declined 0.6% to $1,724.64 per ounce.

Spot palladium rose 0.6% to $1,371.48 per ounce.