Gold prices remained under pressure as diplomatic efforts to reopen the Strait of Hormuz stalled. The critical waterway handles roughly one-third of global seaborne oil trade, and disruptions typically send energy costs higher. With no breakthrough in sight, bullion held onto recent losses as investors priced in renewed inflationary pressure from potential supply constraints.

The ongoing impasse has revived concerns about energy supply chains that could drive consumer prices higher. When oil shipments face delays or rerouting, transportation and manufacturing costs rise across multiple sectors. These inflation fears directly impact precious metals, which investors traditionally use as a hedge against rising prices, though higher interest rates can make non-yielding assets less attractive.

Market participants are now increasing bets that global central banks will need to maintain tighter monetary policy longer than previously expected. Higher interest rates typically weigh on gold prices since the metal does not pay dividends or interest, making it less competitive relative to yield-bearing assets. The Strait of Hormuz situation adds another layer of complexity to central bank decision-making.

The situation demonstrates how geopolitical tensions in key shipping lanes can ripple through global markets, affecting everything from commodity prices to monetary policy expectations. Until diplomatic channels make meaningful progress, gold's downward pressure may persist as rate hike probabilities climb.