Gold Prices Steady Amid Hormuz Tensions and Fed Rate Hikes

Gold prices steadied on Thursday following a drop to a nine-week low. The market faced simultaneous pressure from escalating geopolitical instability and tightening monetary policy in the United States. The Federal Reserve System released meeting minutes indicating that most policymakers support another interest rate hike by the end of the year, which reduces the appeal of gold as a non-yielding asset.

Geopolitical risks have intensified as Iran increased attacks on tankers in the Strait of Hormuz, threatening global energy routes. These attacks, combined with a tropical storm in the Gulf of Mexico that shut down 25% of regional oil production, have raised energy costs and inflation risks. In response to the maritime instability, the White House is considering military strikes against Iranian targets prior to the November midterm elections.

Despite a strong U.S. dollar and inflationary pressures, gold losses were partially offset by central bank activity. The People's Bank of China provided a cushion for the market by increasing its gold reserves by 740,000 ounces in September.