Gold falls despite war risks: has $100 oil rewritten the safe-haven trade?

Gold extended its pullback on Friday as Brent crude’s surge above $100 a barrel revived inflation concerns and complicated the interest-rate outlook before next week’s Federal Reserve meeting.

Spot bullion slipped 0.4% to $4,030.09 an ounce by 0333 GMT, leaving it more than $130 below Wednesday’s two-week high.

August futures declined by the same margin to $4,033.20.

Gold was still heading for a modest 0.4% weekly gain, but the sharp reversal showed that investors remain unwilling to chase the metal while oil, bond yields and policy expectations are moving higher.

The $4,000 floor keeps attracting buyers

Gold’s repeated recoveries around $4,000 suggest the level has become an important short-term anchor.

GoldSilver Central managing director Brian Lan sees sizeable buyers returning whenever prices approach or briefly fall below that threshold, keeping the metal trapped in a broad range between roughly $3,980 and $4,170.

That range also captures the tension in the market.

Geopolitical uncertainty continues to support demand for defensive assets, yet bullion has struggled to hold breakouts because higher energy costs are strengthening the case for tighter monetary policy.

A sustained move below $3,980 would weaken the recent recovery, while a return above $4,100 would be needed to restore stronger upside momentum.

Brent’s breakout changes the inflation calculus

Brent settled at $100.69 on Thursday after jumping about 7%, its strongest close in two months and its first move above $100 since May.

The rally followed Houthi attacks on two Saudi oil tankers in the Red Sea and President Donald Trump’s warning of further military retaliation against Iran and its allies.

The escalation raises the risk of disruption at both Bab el-Mandeb and the Strait of Hormuz, two routes central to global energy flows.

Even without a full closure, longer voyages, higher insurance premiums and tighter tanker availability can feed into fuel and freight costs.

That is an awkward backdrop for gold. Bullion can hedge against inflation over longer periods, but it often struggles in the short run when investors expect central banks to respond with higher rates.

Policy risk caps the weekly gain

The Fed meets on July 28-29 and is widely expected to leave rates unchanged.

Markets, however, are pricing about a one-third chance of an immediate increase, while at least one move is already anticipated by September as oil pushes inflation expectations higher.

The European Central Bank kept its deposit rate at 2.25% on Thursday and retained a data-dependent, meeting-by-meeting approach, leaving policymakers room to tighten again if energy costs keep inflation elevated.

Silver fell 0.7% to $57.29 but remained on course for a 2.5% weekly gain.

Platinum and palladium declined and were heading for weekly losses, underlining how the energy shock is pressuring the wider precious-metals complex.