Gold drops to multi-week low as Middle East tensions rise

Gold prices fell sharply on Thursday, July 16, 2026, hitting multi-week lows as escalating military tensions in the Middle East drove oil prices higher and reinforced market expectations that the U.S. Federal Reserve will maintain elevated interest rates. The precious metal, which does not yield interest, faces significant headwinds when rates are high.

Spot gold dropped as much as 2 percent during the trading session, falling to $3,984.64 per ounce, its lowest level since July 1. U.S. gold futures settled 1.5 percent lower at $3,992.10. The sell-off extended into early Asian trading on Friday, with prices dipping near $3,975. Silver, platinum, and palladium also posted substantial declines.

The primary catalyst for the move was a renewed surge in crude oil prices, fueled by heightened geopolitical risk. Reports indicated Iran has instructed Yemen's Houthi movement to be prepared to close the Red Sea oil transit route if the United States strikes Iranian power infrastructure. This threat follows a series of U.S. military strikes on Iranian targets and a pledge from President Donald Trump to continue offensive operations until Tehran ceases attacks on commercial shipping in the...