Gold and silver rallied on Wednesday as escalating U.S.-Iran tensions and a softer dollar drove safe-haven demand, while crude oil jumped back above $100 a barrel. Spot gold climbed 1.0% to $4,397.47 an ounce, with later quotes near $4,417.87, up 1.46%. Silver advanced 2.46% to $67.37. U.S. gold futures added 0.1% to $4,441.86.
The U.S. dollar index held mostly flat at 98.77, but strength in the Japanese yen contributed to mild dollar weakness, making metals cheaper for foreign buyers. Brent crude traded at $100.72 and WTI at $95.70 after fresh exchanges between Washington and Tehran. Iran's IRGC claimed its largest attack in the Strait of Hormuz, striking 10 vessels in retaliation for U.S. strikes on five Iranian oil tankers. The 90-mile waterway accounts for roughly 21% of global oil supplies.
Rising oil prices are adding to inflation concerns ahead of the Federal Reserve's September 15-16 meeting. Markets now price a 60% chance of a 25-basis-point rate hike, up from 40% one week earlier. The 10-year Treasury yield hovered near 4.81%, its highest since October 2023, which typically pressures non-yielding assets. Traders are watching producer price data on Thursday and consumer price data on Friday as the next major catalysts.
Rick Kanda, managing director at The Gold Bullion Company, said gold could fall toward the low-$4,000s if rate-hike expectations keep rising, but also left open a return toward the August peak. Naeem Aslam of Zaye Capital Markets added that geopolitical disruption can push investors toward defensive assets, while inflation and higher Treasury yields could reduce gold's appeal.
For digital assets, the macro picture is mixed. Higher expected Fed rates and elevated yields may weigh on risk assets including Bitcoin and Ethereum, while geopolitical uncertainty and inflation concerns could support demand for decentralized stores of value. This week's inflation data is likely to set the near-term direction across traditional and crypto markets.
