Gold Prices Steady as Iran War Fuels Inflation and Rate Concerns

Gold prices traded slightly higher during early Asian trading on Wednesday as investors continued to monitor the inflationary impact of the ongoing Iran war and its effect on global interest rates. Despite signals from U.S. officials suggesting progress in peace negotiations with Iran, market sentiment remained cautious, limiting gains in the precious metal market.

Spot gold edged up 0.1% to $4,488.77 per ounce, while gold futures also gained 0.1% to $4,490.95 an ounce. However, gold prices stayed near their lowest levels since early April as traders weighed rising inflation risks and stronger bond yields against the metal’s traditional safe-haven appeal.

Global inflation concerns have intensified in recent weeks due to soaring energy prices linked to disruptions in Middle East oil supplies caused by the Iran conflict. Several major economies recently reported stronger-than-expected inflation data, increasing expectations that central banks, including the U.S. Federal Reserve, will maintain higher interest rates for longer.

Higher interest rates typically reduce demand for non-yielding assets like gold because investors can earn better returns from interest-bearing investments. This has pressured the gold market despite ongoing geopolitical uncertainty.

U.S. President Donald Trump and Vice President JD Vance stated on Tuesday that discussions surrounding a possible peace agreement with Iran had shown some progress. Nevertheless, investors remained cautious as instability in the Middle East continues to threaten global energy supply chains.

Meanwhile, global bond yields remained near multi-year highs after a sharp selloff in bonds over the past two weeks. A stronger U.S. dollar also added pressure on precious metals, making gold more expensive for overseas buyers.

Other precious metals showed modest strength, with spot silver rising 0.3% to $73.9185 per ounce, while platinum held steady at $1,925.66 per ounce.