Gold Falls Over 2% for the Week as Iran Stalemate Fuels Rate Hike Expectations
nashnova research
Spot gold fell more than 2% this week to $4,271.54 an ounce; the US-Iran deadlock over the Strait of Hormuz is keeping oil prices elevated and inflation expectations hot, driving bets that the Fed will hike again — a direct headwind for the zero-yield metal.
Why did gold fall?
Spot gold lost over 2% this week, settling at $4,271.54 an ounce after slipping another 0.1% on Friday.
The logic chain: oil stays high → inflation expectations rise → markets price in more Fed hikes → gold sells off.
This means → gold pays no interest. The higher rates go, the greater the "opportunity cost" of holding it — money flows instead into bonds that actually yield something.
What is the US-Iran stalemate about?
Washington and Tehran are deadlocked over reopening the Strait of Hormuz — the chokepoint for roughly a fifth of global oil shipments.
Negotiators are reportedly discussing a phased deal: Iran reopens the strait, the US lifts port blockades — but nothing is settled.
In plain terms = as long as this waterway stays closed, global oil prices can't come down; if oil can't come down, inflation stays sticky, and the Fed has cover to keep hiking.
What signal is the bond market sending?
The 30-year Treasury yield rose to nearly 5.5% on Thursday — its highest level in more than twenty years.
The 10-year yield hit its highest since 2007.
This reflects a new scenario Wall Street is starting to price in: high yields may not be temporary — they could persist. For gold, sustained high yields mean competing assets keep getting more attractive.
How are silver and the dollar behaving?
Silver fell harder, now at $63.68 an ounce, down nearly 4% for the week — almost double gold's decline.
Platinum and palladium were little changed; precious metals are diverging internally.
The Bloomberg Dollar Spot Index leveled off after five straight days of gains. This means → dollar strength is partly priced in, so near-term pressure on gold from the currency side may ease.
Is anyone still bullish?
Australian hedge-fund manager Raphael Lamm disagrees with the sell-off; his long-short gold fund has returned over 200% net since launch.
He views this pullback as short-term, arguing the structural case for gold remains intact.
In plain terms = in the near term, rate-hike expectations and high bond yields are two weights on gold's price. But whether the long-term thesis — central-bank buying, de-dollarization trends — has cracked is the real point of disagreement.
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