Gold prices surged and oil markets fluctuated after the U.S. and Iran exchanged fire in the Strait of Hormuz, a critical chokepoint for more than 20% of the world's energy supplies.
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Gold Jumps to $4,697 as US-Iran Clash Shakes Hormuz Strait
Gold prices climbed 0.4% to $4,697.55 an ounce after the U.S. military intercepted a series of Iranian attacks on three American destroyers in the Strait of Hormuz Thursday, responding with retaliatory strikes on Iranian military facilities and escalating tensions in the Middle East.
"Investors will closely monitor the upcoming U.S. employment reports for further clues on the strength of the economy and the Federal Reserve’s monetary policy outlook," Bas Kooijman, CEO and asset manager of DHF Capital, said in an email.
The flare-up initially sent global oil benchmark Brent up 2.6% to $102.70 a barrel and drove spot gold higher, though crude prices later reversed. The exchange included Iranian missiles, drones, and small-boat attacks, none of which struck the U.S. warships, according to a statement from U.S. Central Command. The geopolitical shock also triggered a brief selloff across cryptocurrency markets before they stabilized.
The clash threatens a fragile ceasefire that has been in place since April 8, complicating Pakistani-mediated peace talks aimed at ending a two-month conflict. With Iran establishing a new authority to control passage through the strait, the risk of a wider disruption to global trade that could fuel inflation remains a key concern for markets.
US and Iran Offer Conflicting Accounts
U.S. Central Command said its forces intercepted "unprovoked Iranian attacks" as three of its destroyers—the USS Truxtun, USS Rafael Peralta, and USS Mason—were transiting the strait. It confirmed it carried out self-defense strikes on Iranian military facilities responsible for the attacks, including sites on Qeshm Island and near Bandar Abbas, according to media reports.
In contrast, Iranian state media accused the U.S. of violating the ceasefire by targeting its ships, including an oil tanker. Iran's military claimed its forces inflicted "significant damage" on the U.S. vessels in retaliation for American aggression. U.S. officials denied that any of their ships were hit.
The war began on February 28 when the U.S. and Israel launched strikes against Iran. The conflict led to a surge in energy prices after Iran threatened to disrupt shipping in the Strait of Hormuz, through which more than a fifth of the world's oil and gas shipments pass.
Fragile Ceasefire Holds Despite Exchange
Despite the exchange of fire, President Donald Trump insisted the ceasefire remains in effect, calling the U.S. response a "love tap" in a phone call with ABC News. He reiterated threats of a more violent response if a peace deal is not signed quickly.
The Trump administration has sent mixed messages regarding its strategy. A U.S. military operation to create a safe passage for commercial ships, dubbed "Project Freedom," was suspended this week to allow more time for negotiations. The suspension reportedly came after Saudi Arabia, a key U.S. ally, refused to support the effort and denied the use of its airspace.
Pakistan, which is mediating the peace talks, said it expects an agreement "sooner rather than later." However, significant obstacles remain, including U.S. demands for Iran to hand over its enriched uranium stockpile and suspend its nuclear enrichment program for 20 years.
Iran Moves to Formalize Control Over Strait
Adding to commercial uncertainty, Iran has established a new government agency, the Persian Gulf Strait Authority, to vet and tax vessels seeking passage. According to shipping data firm Lloyd’s List Intelligence, the authority is positioning itself as the sole body to grant transit permission, a move that maritime law experts say violates international conventions on freedom of navigation.
The new agency formalizes an existing process where Iran controls which ships can pass through the strait's northern waters near its coastline, in some cases imposing a tax on their cargo. The U.S. and its allies are pushing for a U.N. Security Council resolution to condemn Iran's actions, but a previous effort was vetoed by Russia and China.
This article is for informational purposes only and does not constitute investment advice.
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