Gold Approaches $5,400 and Oil Surges as Hormuz Closes

The price of gold approached $5,400 per ounce, while Brent crude surged nearly 13% during tense trading, following Iran's announcement of a de facto closure of the Strait of Hormuz after the recent incident targeting two oil tankers with naval mines. Kitco data showed that the yellow metal recorded one of its highest historical levels as investors rushed toward safe assets.

Market analysts explain this dual move by noting that the closure of the world's most vital oil trade waterway elevates geopolitical risks to unprecedented levels since the start of the regional war between Iran, Israel, and the United States, driving major investment funds to reduce exposure to risky assets and turn to gold as a traditional safe haven in times of crisis.

The rise coincided with markets anticipating the upcoming U.S. interest rate decision at the central bank's meeting on October 27 and 28, as some traders believe that continued tension in the Gulf could push the Federal Reserve to adopt a more cautious tone regarding rate cuts, adding an extra factor supporting precious metal prices.

On the other hand, a number of Wall Street strategists warned that a strong dollar and rising yields could limit gold's momentum in the near term, while retail investors believe the upward trend remains intact as long as uncertainty persists over the fate of the Strait of Hormuz and its impact on global energy supplies.

What do these terms mean?

**Safe Haven:** An asset investors turn to during times of crisis and unrest to protect their money from volatility, such as gold, the U.S. dollar, and government bonds.

**Ounce:** A traditional unit of measurement for gold weight equivalent to approximately 31.1 grams, and the globally accepted unit for pricing precious metals.

**Brent:** A benchmark crude oil extracted from the North Sea, used as a reference for pricing the majority of oil exports worldwide, including Arabian Gulf oil.