Gold falls 0.9% to $3,913.62 as Iran strikes revive inflation fears

Key Facts

Spot gold fell 0.9% to $3,913.62 an ounce by 0653 GMT on Nov. 3, after gaining more than 2% in the previous session, according to Reuters coverage published by Profit by Pakistan Today. The decline came as inflation fears resurfaced after reports of U.S. strikes on Iranian targets, while energy prices prompted traders to reassess the interest rate outlook. Silver also fell in early trading as the market weighed rising geopolitical risks against the potential inflationary impact of higher oil prices. Iranian media reported hearing explosions in Qeshm, Hengam and Bandar Abbas on Nov. 3. A U.S. official said the United States had carried out strikes on Iranian targets, which the Associated Press described as an operation that appeared limited.

Reuters said rising energy prices had revived inflation concerns and strengthened expectations that U.S. interest rates would remain higher for longer. Those expectations weigh on gold, as higher rates increase the opportunity cost of holding a non-yielding asset. According to CME Group's FedWatch tool, traders were pricing in a 73% probability of the Federal Reserve raising rates in December. In other early trading on Nov. 3, gold fell 0.7% to $3,920.44 an ounce, silver declined 2.8% to $49.2455 an ounce, and the dollar index fell 0.1%, according to Investing.com. The moves show metals retreating despite ongoing tensions, as oil's impact and monetary policy expectations took precedence in market pricing.

Metals had risen in the previous session amid signs of progress in peace talks, with gold gaining 1.9% on Monday, Nov. 2. Brent crude, meanwhile, fell more than 7% before oil prices steadied on Tuesday, according to the same report. But renewed reports of strikes brought attention back to the risk of energy supply disruptions across the region and what higher costs could mean for inflation. Against this backdrop, gold lost 6.8% in October and fell below $4,000 an ounce near the end of the month, reaching its lowest level in a year. The U.S.-Iran conflict, which the report said had lasted nine months, pushed up energy prices and fueled inflation, increasing pressure on central banks to raise interest rates.

The metals' moves coincided with the U.S. federal general election scheduled for Nov. 3, the date set by the Federal Election Commission for the regular election. The Associated Press said the midterm elections determine which party controls Congress, and noted that the 2026 elections could be the most expensive in history. On economic data, the U.S. Bureau of Labor Statistics had scheduled the September 2026 Job Openings and Labor Turnover Survey for 10:00 a.m. Eastern time on Nov. 3. Traders are watching labor data as they assess the outlook for the economy and monetary policy. The Associated Press also reported, citing regional officials and a person familiar with the matter, that Israeli Prime Minister Benjamin Netanyahu pushed for another wave of strikes on Iran after the U.S. election.