Gold remained near record levels during the week ending 4 June, highlighting investors’ growing focus on inflation and monetary-policy risks despite tentative signs of de-escalation in the Middle East.
Spot gold traded around $4,450 an ounce by Thursday, recovering part of the previous session’s losses and remaining within a few percentage points of the record highs reached during the recent Middle East conflict. The metal posted a modest weekly gain, underscoring its resilience even as diplomatic efforts sought to reduce regional tensions.
The week’s trading was shaped by a conditional ceasefire agreement between Israel and Lebanon and reports of preliminary discussions between Washington and Tehran aimed at extending a regional truce and facilitating the reopening of the Strait of Hormuz. Under normal circumstances, easing geopolitical tensions would weaken demand for safe-haven assets. Instead, bullion continued to attract buyers.
The apparent contradiction reflects growing concern that weeks of disruption to energy flows through Hormuz may already have altered the global inflation outlook. Although oil prices stabilised toward the end of the week after several sessions of gains, energy costs remain well above pre-conflict levels, raising the risk that inflationary pressures could persist across major economies.
Those concerns were reinforced by comments from Dallas Federal Reserve President Lori Logan, who indicated that policymakers may still need to maintain a restrictive stance—or potentially tighten further—if inflation fails to return sustainably to the Fed’s 2% target. Such expectations would typically weigh on non-yielding assets such as gold, making the metal’s strength particularly notable.
Structural demand also continues to underpin the market. Central banks have remained significant buyers of gold as countries diversify reserves and reduce exposure to geopolitical and currency risks. According to the World Gold Council, official-sector purchases have exceeded 1,000 tonnes annually for three consecutive years, helping to establish a powerful floor under bullion prices even during periods of elevated interest rates.
Silver, platinum and palladium also advanced during the week, while a softer US dollar provided additional support for precious metals.
Looking ahead, investors will focus on progress in US-Iran negotiations, the pace of any reopening of the Strait of Hormuz and upcoming inflation data from major economies. The key question is no longer whether geopolitical tensions alone can support gold, but whether the inflationary consequences of those tensions will continue to reshape monetary-policy expectations.
For now, the week’s trading suggests that gold is increasingly being viewed not merely as a hedge against conflict, but as protection against an inflation-prone and uncertain global economy. Its ability to remain near historic highs despite ceasefire optimism indicates that markets remain more concerned about inflation and policy uncertainty than the immediate prospect of regional de-escalation.
