Gold Gains Momentum as Strait of Hormuz Tensions Rattle Global Markets

Gold prices are gaining momentum as escalating tensions in the Strait of Hormuz trigger a broad risk-off move across global financial markets. The precious metal is attracting safe-haven flows amid fears of potential supply disruptions in one of the world's most critical oil transit chokepoints. This geopolitical jolt comes at a time when gold has already been supported by a structural shift in central bank buying, which surged to record levels in 2022 and 2023 as institutions diversified reserves away from the US dollar. The real US 10-year yield, which typically has a strong inverse correlation with gold prices, has also been declining recently, providing additional tailwinds. Meanwhile, the COMEX-LBMA spread has widened slightly, indicating some physical delivery stress in the futures market, while ETF flows into GLD and IAU have picked up modestly as retail investors join the safe-haven bid.

The Strait of Hormuz, through which about 20% of global oil passes, has become a flashpoint for geopolitical risk. Investors are rotating out of equities and into traditional safe havens, with gold benefiting from the flight to quality. The heightened uncertainty also supports gold's appeal as a hedge against geopolitical instability, a role it has historically played during periods of conflict or supply threats. Beyond geopolitical hedging, gold demand is also being driven by jewelry consumption in key markets like India and China, though investment demand has been more volatile. The US Dollar Index (DXY) has weakened slightly amid the risk-off mood, further boosting gold's attractiveness to non-dollar buyers. Traders can track the move on NowPrice's live gold dashboard to monitor real-time price action.

Looking ahead, market participants will focus on any diplomatic developments or military escalation in the region. A prolonged disruption could push oil prices sharply higher, further fueling inflation concerns and potentially altering central bank policy expectations. If inflation expectations rise faster than nominal yields, real yields could fall further, providing another boost to gold. Conversely, a de-escalation could trigger profit-taking. Gold's next key levels will depend on the evolution of the crisis and broader risk sentiment in the coming days, with traders also watching for any shifts in COMEX positioning or LBMA clearing volumes.