Hormuz Shipping Tensions Fuel Gold Rally Amid Geopolitical Risks

Gold prices held steady near seven-week highs on Monday as concerns over shipping security in the Strait of Hormuz revived a geopolitical risk premium, supporting the metal's safe-haven appeal.

The Strait of Hormuz is a critical oil transit route, through which about 20% of global oil consumption passes. Recent incidents involving commercial vessels near the strait have raised concerns about the safety of maritime routes, prompting investors to seek refuge in assets like gold.

The link between Hormuz and gold is indirect but significant. Any perceived threat to oil shipments can fuel inflation expectations and risk aversion, making gold a hedge against both inflation and geopolitical instability.