Gold Price Hesitates at $4,440 as Oil Prices Soar

The gold price has paused its rally near $4,440 as oil prices continue to surge due to escalating tensions surrounding the Strait of Hormuz. The precious metal had earlier reached a two-month high of $4,435 but has since retreated to around $4,380 during the European trading session on Tuesday.

Analysts at Danske Bank attribute the rise in oil prices to the uncertainty surrounding the reopening of the Strait of Hormuz, a vital passage for almost 20% of global energy supply. They note that negotiations over the key shipping route have stalled, with President Trump's latest demands adding further uncertainty to the prospect of a deal.

Higher oil prices prompt global inflation expectations, which in turn accelerates fears of interest rate hikes by central banks. This scenario bodes poorly for non-yielding assets like gold.