Gold Revives as Mideast Tensions Ease, Fed Rate Expectations Rise

The Middle East conflict has had far-reaching implications for global markets, with gold being no exception. The precious metal's price plummeted by a fifth since the outbreak of war in the region, as rising oil prices fueled concerns about accelerating inflation and tighter Fed monetary policy.

However, recent de-escalation efforts have breathed new life into gold. A deal between Oman and Iran to reopen the Strait of Hormuz has increased oil supply, driven down Brent prices, and paved the way for disinflation in the US economy.

As a result, expectations are growing that the Federal Reserve will keep interest rates unchanged in September and through the end of 2026. This is music to the ears of gold investors, as high inflation without monetary tightening creates favorable conditions for gold prices to rise.