Gold prices have declined for a third consecutive trading day following a new round of US strikes against Iran, an action that threatens to prolong the conflict which has already unsettled global markets and fueled inflation.

The price of gold fell as much as 1.2% to around $4,024 per ounce, extending Wednesday's 4.4% drop, before paring losses in volatile trading. The move came after the US President accused Iran of stalling negotiations for a provisional peace deal, prompting US forces to launch missiles at "multiple" targets within Iran. Tehran responded by closing the Strait of Hormuz to all maritime traffic.

The latest strikes underscore the growing impatience over the failure to reach an agreement. The conflict, now in its fourth month, has disrupted energy shipments through the Strait of Hormuz, driving up oil prices and increasing the likelihood that central banks will raise interest rates to combat inflation.

Driven higher by war-induced energy costs, US inflation in May hit its highest level in over three years, outpacing wage growth for American workers. Data released on Wednesday showed the Consumer Price Index rose 0.5% month-on-month and 4.2% year-on-year in May, marking the largest increase since early 2023.

Gold is now trading approximately 23% below its level from late February, before the outbreak of the Iran conflict. A recent break below its 200-day moving average and the key support level of $4,100 per ounce has triggered further selling, as this threshold is seen as a critical level closely watched by institutional investors.

"Contradictory news headlines are heightening market uncertainty, prompting investors to reduce risk exposure and increase liquidity across asset classes," stated a former precious metals trader and current advisor in a social media post. He noted that the latest decline "appears driven more by deleveraging and portfolio rebalancing than a fundamental reassessment of gold's role as a safe-haven asset."

As of 8:20 a.m. Singapore time, spot gold was down 0.2% at $4,063.52 per ounce. Silver fell 0.63% to $62.96 per ounce. Platinum prices also retreated, while palladium prices advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency's strength, held steady.