Gold fell 2% to around $4,520 an ounce as tensions rose in the Persian Gulf. U.S. forces reported repelling Iranian attacks while escorting two U.S.-flagged ships through the Strait of Hormuz. The clash threatens a four‑week ceasefire and stokes fears of higher inflation and further interest‑rate hikes.

The Pentagon said it had pushed through a defensive operation after Iranian forces fired missiles at the vessels, while the United Arab Emirates confirmed intercepting cruise missiles and blamed a drone strike for a blaze at its Fujairah port in the region and raised concerns about regional stability and global energy prices further volatility.

Gold's decline signals that investors are wary of a potential spike in commodity prices if the conflict escalates. With the U.S. Federal Reserve eyeing higher rates to curb inflation, a prolonged flare could tighten liquidity and push bond yields higher for safety investors and could impact portfolio allocations across equities and fixed income sectors.

The incident underscores the fragile balance between geopolitical unrest and financial stability. Traders now face a tighter risk environment as any escalation could trigger further price swings in gold, oil, and U.S. Treasury markets for global investors and could reshape asset allocation strategies until the situation clarifies.