Hormuz Tensions Lift Gold and Silver Amid Rate Hike Fears

Gold and silver prices are rising as geopolitical tensions in the Middle East offset pressure from interest rates. The Strait of Hormuz remains the main channel for oil, inflation expectations, and defensive demand. On Tuesday, the U.S. military destroyed five Iranian oil tankers after Iranian attacks on U.S. warships, while Tehran struck back at U.S. targets in Jordan.

The latest positioning is caught between geopolitical demand and a still-hawkish Fed setup. Markets are pricing about a 60% probability of a 25-basis-point rate hike at the Fed's September 15-16 meeting, with the 10-year Treasury yield trading near 4.81%, its highest level since October 2023.

The Producer Price Index is due Thursday and the Consumer Price Index is due Friday, both carrying more weight because of revived inflation concerns. For gold, the balance is conflicted but constructive in the short term: higher crude and elevated yields raise the opportunity cost of holding bullion, but safe-haven flows, a softer dollar, and concern over Gulf supply routes are offsetting the rate headwind.

Gold has recovered from the $4,347 support area and is testing toward the $4,422 resistance level, while silver remains compressed below $67.21 after holding above the $64.73 support level. The price action suggests buyers are using geopolitical risk to defend dips, but the inflation data will decide whether the move extends or stalls under the Fed-rate channel.

The impact of Hormuz risk on gold is two-sided: it supports safe-haven demand, but higher energy prices lift inflation expectations, keep Treasury yields elevated, and preserve the Fed-hike risk into next week's meeting. Global markets were mixed to weaker ahead of the U.S. open, with U.S. stock-index futures slipping as oil climbed above $100 and Treasury yields held near three-year highs.