Spot gold and silver traded lower ahead of the market open on Wednesday as renewed tensions between the United States and Iran lifted crude oil prices offsetting the traditional safe-haven appeal of precious metals.
At the time of writing, spot gold was trading near $4,074.10 per ounce, down 0.75% on the session, while spot silver traded near $58.30 per ounce, down 2.57%.
Earlier in the session, gold had swung between gains and losses.
Spot gold briefly rose 0.5% to $4,125.59 an ounce by 0305 GMT after initially falling to its lowest level since July 2.
Meanwhile, US gold futures for August delivery were down 0.5% at $4,136.30.
Oil extends gains after early rally
Crude oil prices remained elevated after extending gains made earlier in the trading session.
At the time of writing, WTI crude was trading near $74.93 per barrel, while Brent crude stood at $78.73 per barrel.
Earlier on Wednesday, US crude had already jumped in early trade following fresh geopolitical developments, reflecting growing concerns over potential disruptions to global energy supplies.
The latest move followed reports of attacks on three commercial vessels in and around the Strait of Hormuz, subsequent US military strikes on Iranian targets, and Washington's decision to revoke Iran's oil-sales waiver.
President Donald Trump also said that the Iran agreement was finished, adding to market uncertainty.
Despite the escalation, shipping through the Strait of Hormuz has remained open, although risks to commercial transit have increased.
Higher oil and a stronger dollar pressure bullion
The rise in oil prices altered the market's reaction to geopolitical uncertainty.
Typically, escalating geopolitical tensions boost demand for gold as a safe-haven asset.
However, the latest developments have also strengthened inflation expectations by lifting energy prices.
As a result, bullion has struggled to sustain gains despite heightened geopolitical risks.
Market participants are also awaiting the release of the Federal Reserve's June meeting minutes later in the day for additional clues on how policymakers are assessing inflation risks following the latest jump in oil prices.
Gold trades below key resistance levels
Gold traded within an early range of $4,040.10 to $4,134.90, remaining above the psychologically important $4,000 level but below the $4,162.36 to $4,214.34 resistance zone that capped the previous rebound.
On the downside, immediate support is seen at $4,072.40, followed by $4,041.65.
A break below $4,041.65 could expose gold to further declines toward $3,942.10, with a deeper downside target at $3,886.46.
Silver also remained under pressure, trading within an early range of $57.99 to $61.15.
The metal continued this week's reversal after failing to maintain momentum above the $61.00 level.
The broader price action suggests that precious metals remain caught between rising safe-haven demand driven by geopolitical uncertainty and the countervailing effects of higher oil prices and a firmer US dollar.
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