The price of spot gold exhibited a volatile session during the Asian and European trading hours on Wednesday, initially showing resilience to negative news before undergoing a significant correction. It is currently down approximately 0.5%, having earlier risen by as much as 0.5%, and is trading near $4090 per ounce.
The trigger for the previous evening's sharp decline of over 1% in gold was a firm stance from the United States regarding attacks on three vessels near shipping lanes off Oman. According to senior officials, the US will revoke the general license for Iran's oil sales abroad. However, gold prices did not extend their losses in the morning following a US military strike on Iran, instead staging a minor rally. This was because Iran did not respond by blocking the Strait of Hormuz, leading markets to interpret the actions as mutual posturing within a broader negotiation framework.
Subsequently, a significant shift was signaled when the US President stated at a NATO summit that he considered the US-Iran understanding memorandum "terminated," marking a major turning point in the diplomatic process.
US officials had previously clarified that the provisional memorandum was contingent on Iran's continued cooperation. Iran's recent attacks on ships in the Strait were seen as crossing a clear red line, making additional sanctions inevitable.
Nevertheless, the US negotiating team has indicated a willingness to continue discussions, leaving the door open for a final agreement.
Concurrently, a senior US official issued a stern warning that the fragile provisional ceasefire could collapse entirely if Iran persists in obstructing oil tanker traffic and disrupting normal shipping in the Strait.
Military Escalation: US Targets Iran's Core Naval Assets
Reports indicate that the US military strike on Iran on Tuesday local time represented a significant escalation, with both the scale of the operation and the intensity of firepower increased four to fivefold compared to the initial strike ten days prior.
The US Central Command stated that the objective of this large-scale airstrike was to impose tangible geopolitical costs on Iran for attacking civilian commercial vessels in a critical international waterway.
The strikes precisely targeted Iranian coastal air defense radars, missile systems, and over sixty fast-attack craft operated by the Islamic Revolutionary Guard Corps (IRGC). These small vessels are central to Iran's strategy of harassing international oil tankers and LNG carriers in the Strait of Hormuz and are key tools for asserting control over the waterway.
The US emphasized that its forces would remain on high alert, prepared to implement additional punitive measures if Iran violates the ceasefire framework, and confirmed that this round of airstrikes has concluded.
Iran's Forceful Retaliation Triggers Regional Air Defense Alerts
Iranian authorities confirmed the airstrikes on its territory but did not disclose specific casualty or equipment loss figures.
State media reported powerful explosions at three key coastal hubs: Bandar Abbas, Qeshm Island, and Sirik.
Port workers in Bandar Abbas reported that the fishing wharf behind the fish market was precisely hit by enemy shells, igniting a fire that spread to several civilian fishing boats, causing damage to civilian infrastructure.
Subsequently, the IRGC officially announced a retaliatory strike, launching missiles at permanent US military bases in Bahrain and Kuwait.
Bahrain, home to the US Navy's Fifth Fleet, and Kuwait, which hosts US Army forces, immediately activated nationwide missile defense alerts. Bahrain triggered its air raid alarm three times consecutively that morning, causing regional risk aversion sentiment to spike and fluctuate wildly.
In a statement, the IRGC accused the US of unilaterally tearing up the ceasefire agreement and bilateral consultation understandings, carrying out what it termed "terrorist" military operations by attacking Iranian coastal civilian and military facilities, while deliberately ignoring its own prior attacks on commercial ships.
Cycle of Conflict Repeats; Gulf Nations Question Iran's Intentions
This round of confrontation is not an isolated incident. A nearly identical chain of events—Iranian ship attacks, US retaliatory airstrikes, Iranian counterstrikes on US bases in Bahrain and Kuwait—occurred in late June.
The timing of this latest escalation, coinciding with the US President's attendance at a NATO summit in Turkey, adds an external geopolitical variable, further complicating the Middle East situation.
A senior Emirati diplomat publicly commented on the situation, stating that Iran's repeated military strikes against Bahrain and Kuwait demonstrate that Tehran lacks the genuine will to implement de-escalation clauses and definitively end regional confrontation.
He emphasized that Gulf Arab states cannot indefinitely endure the indiscriminate attacks resulting from Iran's vacillation between escalating conflict and maintaining a semblance of stability, which has persistently disrupted the regional stability framework.
Details of Ship Attacks Revealed: Disagreement Over Navigation Rules at Core
A UK maritime trade monitoring agency provided details of the recent attacks: a Qatari LNG carrier was hit and caught fire off the coast of Oman, while two other vessels involved sustained minor hull damage. There were no crew casualties, and the ships proceeded normally along the Strait of Hormuz route.
Iranian state television responded, stating the LNG vessel in question ignored prior Iranian navigation warnings and proceeded in violation of regulations, thereby inviting the strike. However, Iran did not directly claim responsibility for the attacks.
Since the onset of the current Middle East conflict, Iran has consistently asserted control over shipping discourse in the Strait of Hormuz, unilaterally declaring the northern route as the only legal and safe passage. It has repeatedly warned that any vessels using the southern route along the Omani coast face military strike risks. The three attacked ships were all using this Omani coast route prohibited by Iran.
A Qatari foreign ministry spokesperson stated that the attack on its LNG carrier was an unacceptable act that severely undermines international shipping order and global energy security.
As a key mediator alongside Pakistan in the US-Iran negotiations, Qatar asserted that Iran must bear full legal responsibility for the unlawful ship attacks.
Ceasefire Contradictions Exposed: Core Demands Remain Irreconcilable
The provisional ceasefire memorandum previously agreed upon by the US and Iran stipulated a 60-day period of toll-free passage for vessels through the Strait of Hormuz.
However, Iran subsequently presented two non-negotiable demands: complete control over the allocation of all shipping lanes in the Strait, and the imposition of transit fees on all vessels after the transition period.
This new framework would fundamentally overturn the decades-old commercial practice of free navigation in this critical global energy artery.
In response, the United States, along with a majority of Gulf Arab states, formed a unified stance, explicitly rejecting Iran's demands for transit fees and monopoly control over the Strait. This core disagreement remains unresolved, sowing the seeds for continued conflict.
The Iranian foreign ministry also stated that its established arrangements for passage through the Strait of Hormuz are continually being violated. Combined with ongoing Israeli military strikes in Lebanon, these multiple negative factors are steadily eroding the effectiveness of the provisional ceasefire.
Summary and Technical Perspective
Analysis from yesterday noted the high probability of a US counterstrike, suggesting that gold and oil prices would remain volatile. Gold subsequently corrected as anticipated. The muted initial market reaction to the morning's significant US military strike was due to Iran's decision not to re-blockade the Strait, indicating that such a blockade is not currently in Iran's interest. This suggests both sides remain within a negotiation framework, with Iran likely seeking to leverage the situation to gain control over the Strait.
Furthermore, recent dovish commentary from a Federal Reserve official, combined with US employment data and a degree of market desensitization to US-Iran tensions, has been supportive of a gold price rebound.
However, the US President's statement declaring the understanding memorandum "terminated" directly pierced the market's fragile nerves.
With gold remaining in a broader downtrend and the US-Iran situation deteriorating beyond expectations, the price of gold remains at high risk of probing lower levels or continuing its decline.
Market attention now turns to the upcoming release of the Federal Reserve meeting minutes. If the primary logic of the "dot plot" was strong employment, the recent disappointing non-farm payrolls data could directly alter the overall interest rate inclination of the FOMC. While the outlook for US-Iran talks appears pessimistic, a blockade of the Strait does not serve Iran's interests. The immediate focus is on whether the US will make concessions or move to re-impose a blockade on Iranian oil shipments.
From a technical standpoint, the gold price continues to face resistance from a descending trendline and the upper boundary of a descending channel. Without clear positive developments in the US-Iran situation in the near term, a second test of support around the $4004 level appears likely.
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