Gold Prices Decline Amid US-Iran Military Escalation

Gold and silver prices experienced a volatile downward trend through July 11, 2026, driven by a combination of geopolitical instability and hawkish monetary signals. The decline began as Donald Trump declared an interim ceasefire agreement with Iran effectively over, prompting the United States to launch military strikes on approximately 170 Iranian targets and revoke Iran's oil export licenses. Iran retaliated by attacking U.S. military bases in Bahrain and Kuwait and targeting commercial vessels in the Strait of Hormuz.

While geopolitical conflict typically supports gold, the escalation pushed crude oil prices higher, fueling inflation concerns. Investors feared this would compel the Federal Reserve System to maintain or increase interest rates, making non-yielding assets like gold less attractive. This was reinforced by Federal Open Market Committee minutes suggesting persistent inflation and a higher-for-longer rate environment. Consequently, Bank of America lowered its 2026 average gold forecast by 14% to $4,060 per ounce.

Prices saw a brief rebound around July 10 after reports emerged that fresh attacks had ended and that Tehran sought a new agreement. However, this recovery was short-lived. By July 11, international gold had depreciated 1.6% for the week to around $4,100 per ounce. In India, 24-carat gold dropped to ₹143,368 per 10 grams. Conversely, the Government of China provided a counter-cyclical buffer, with the People's Bank of China adding 480,000 ounces to its reserves in June.