Gold Prices Slip as US-Iran Tensions Drive Oil Higher and Fuel Inflation Concerns

Kuala Lumpur, May 26, 2026 — Gold prices fell on Tuesday after renewed geopolitical tensions between the United States and Iran pushed oil prices higher, raising fears of persistent inflation and delayed interest rate cuts.

Spot gold dropped 0.9% to $4,529.50 per ounce as of early Asian trading. U.S. gold futures for June delivery edged up slightly by 0.2% to $4,529.60.

The decline comes after U.S. Secretary of State Marco Rubio stated that negotiations with Iran could take “a few days,” dashing hopes for a quick resolution following American strikes in southern Iran. The ongoing uncertainty has disrupted expectations for a swift recovery in Middle East oil production.

“Even though a peace deal is being discussed, the damage to oil production facilities in the region could prevent a rapid return to normal oil flows,” said Kelvin Wong, Senior Market Analyst at OANDA. “The market is now pricing in higher odds of a U.S. interest rate hike later this year.”

Oil Surge Adds Pressure

Brent crude futures climbed 2% in Asian trade as a deal to reopen the Strait of Hormuz remains elusive. Higher oil prices typically feed into broader inflation, which in turn supports the case for the Federal Reserve to keep interest rates elevated for longer.

While gold is traditionally viewed as a safe-haven asset and inflation hedge, rising interest rates tend to pressure the non-yielding metal by increasing the opportunity cost of holding it.

Markets are currently assigning a 56% probability of a U.S. Federal Reserve rate hike by December, according to CME Group’s FedWatch tool.

Other Precious Metals Also Weaken

• Silver fell sharply by 2.1% to $76.45 per ounce
• Platinum declined 1% to $1,948.12
• Palladium slipped 1.4% to $1,378.89

The latest developments highlight how geopolitical risks in the Middle East continue to influence global commodity markets, creating volatility across both energy and precious metals sectors.