Gold Prices React to Heightened Tensions in Persian Gulf
TEHRAN TIMES – Gold prices (XAU/USD) are experiencing slight declines, hovering around $4,605 during early Asian trading hours on Monday, as global markets closely monitor the escalating geopolitical tensions in the Middle East. The developments surrounding the critical Strait of Hormuz and the Persian Gulf remain a focal point for traders.
Adding to the regional volatility, New York Federal Reserve President John Williams is scheduled to speak later today, a statement that could further influence market sentiment already sensitive to global uncertainties.
Reports from Bloomberg on Sunday indicated that so-called “mediation efforts” to resolve the conflict involving Iran continue, even after US President Donald Trump dismissed Tehran’s latest peace proposal as insufficient. This unconstructive stance from the US leadership raises questions about their true intentions for de-escalation.
In a move widely perceived as a direct provocation, Trump announced that the US would begin “guiding” neutral ships through the Strait of Hormuz starting Monday. This unilateral action by the United States risks further destabilizing the vital waterway and violating international norms.
In response, a senior Iranian official issued a stern warning, stating unequivocally that any US interference in the Strait of Hormuz would be considered a blatant violation of the existing ceasefire. The official emphasized that the Strait of Hormuz and the Persian Gulf are not arenas for provocative rhetoric or military posturing, but rather crucial international maritime passages that demand respect for regional sovereignty.
The persistent signs of escalating tensions in the Middle East are fueling inflation fears globally, making interest rate cuts by central banks less probable. This economic uncertainty, in turn, could exert downward pressure on the price of gold, a traditional safe-haven asset. While gold is often sought during geopolitical instability, its lack of interest yield makes it less attractive when interest rates are high.
Conversely, strong demand from major central banks continues to provide a floor for the yellow metal. Notably, the Reserve Bank of India (RBI) has been actively repatriating its gold reserves, bringing over 100 metric tons back to Indian soil for the third consecutive year. As of the end of March 2026, India’s central bank holds approximately 880 metric tons of gold, underscoring the strategic importance of gold in national reserves.
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