Trump Authorizes Iran Strikes as Gold Prices Fluctuate

Military tensions between the United States and Iran escalated on Wednesday after Donald Trump authorized strikes on Iranian targets, including Bandar Abbas and Qeshm Island, to secure commercial shipping in the Strait of Hormuz. Iran retaliated by targeting U.S. bases in Bahrain, Iraq, Jordan, and Kuwait. While Iranian President Masoud Pezeshkian expressed readiness to honor a June 17 Memorandum of Understanding, Trump rejected further negotiations, asserting that the Iranian economy is collapsing and the U.S. maintains total control of the waterway.

The geopolitical conflict initially drove gold prices to a three-week low as rising oil prices stoked inflation fears. Market participants initially priced in a 70% chance of a Federal Reserve interest rate hike, with Fed Chair Kevin Warsh and Governor Michael Barr signaling potential increases if inflation remained high.

However, gold prices rebounded to $4,377.80 per troy ounce later Wednesday following the release of U.S. private jobs data. Automatic Data Processing reported that private employers added only 38,000 jobs in August, falling short of the 47,000 forecast. This weaker-than-expected economic data lowered expectations for a Federal Reserve rate hike, offsetting the previous losses driven by the conflict with Iran.