Geopolitical conflicts are typically seen as gold’s moment to shine. When the specter of war looms, safe-haven capital floods into precious metals, driving up prices—a deeply ingrained principle in financial markets. Yet, the market action on July 9, 2026, is challenging this conventional wisdom.
As of July 9 (UTC+8), spot gold traded around $4,070 per ounce, marking its fourth consecutive daily decline. COMEX gold futures fell 1.7% to close at $4,086.6 per ounce. Meanwhile, US-Iran military tensions escalated sharply. US forces launched a new round of airstrikes on roughly 90 targets inside Iran, while Iran’s Revolutionary Guard retaliated against US military bases in Bahrain and Kuwait. President Trump publicly declared the US-Iran memorandum of understanding "terminated" and warned of further potential strikes.
Instead of rallying, gold is falling. Bitcoin is also failing to break out independently. As of July 9 (UTC+8), Bitcoin traded at $62,512.1, down 0.12% over 24 hours, but its seven-day cumulative decline reached 7.63%, and its 30-day drop hit 10.73%. This price is 33.74% below its July 2025 peak of $126,193.0. Ethereum traded at $1,730, down 1.2% on the day. The Fear & Greed Index slid from 28 to the 20–23 range, signaling "extreme fear."
In stark contrast to the weakness in gold and Bitcoin, international oil prices are surging. WTI crude futures settled at $73.52 per barrel, up 4.37% in a single day. Brent crude futures closed at $78.02 per barrel, soaring 5.2% and briefly breaking above the $80 mark.
The "war premium" is not flowing into gold or Bitcoin—it’s being fully absorbed by the oil market and, through a hidden yet clear transmission chain, is exerting dual pressure on both non-yielding assets and risk assets.
Strait of Hormuz: The World’s Energy Choke Point and the Inflation Switch
To understand the underlying logic of this market disruption, we must return to the source of the conflict—the Strait of Hormuz.
This narrow waterway between Oman and Iran is the world’s most critical oil transit route. About 30% of global seaborne oil trade passes through it, so any disruption instantly impacts global energy supply. Since July, this vital artery has faced its most severe threat since the outbreak of the US-Iran war.
The chain of events began when three commercial ships in the Strait of Hormuz were hit by unidentified missiles. The US Central Command responded by striking over 80 targets inside Iran, including air defense systems, command-and-control networks, coastal radar installations, anti-ship missile facilities, and more than 60 Islamic Revolutionary Guard Corps (IRGC) speedboats in and around the strait. The US military stated its goal was to "degrade Iran’s ability to attack commercial shipping in international trade routes." The conflict quickly escalated, with US forces launching another round of strikes, expanding their targets to roughly 90 Iranian military facilities.
Iran’s response was equally forceful. Chief negotiator Kalibaf made it clear: "The Strait of Hormuz will only reopen on Iran’s terms, not under US threats." The IRGC targeted four US bases in Bahrain and Kuwait with missiles and drones.
Tanker traffic through the Strait of Hormuz has "essentially stopped." This reality is reflected directly in oil prices—Brent crude climbed back above $80 after the escalation, and WTI posted its largest single-day gain in five weeks.
Rising oil prices are never just about oil. As the foundation for modern production and transportation costs, every jump in crude prices cascades along the "energy cost → production cost → end price" chain, ultimately appearing as inflation in every economy’s price index. As inflation expectations heat up, central banks are forced to shift their monetary policy stance.
Rising Inflation Expectations: How Rate Hike Fears Are Recasting the Market
There is a well-established transmission path between surging oil prices and rising inflation expectations.
According to the American Automobile Association, before the US-Iran war, average US gasoline prices were below $3 per gallon. By May, they had soared above $4.56. Now, with renewed conflict, upward pressure on energy prices is again filtering through to consumer goods.
The Federal Reserve’s June meeting minutes, released on July 9 (UTC+8), reinforced the market’s hawkish outlook. The minutes show that Fed officials generally believe that if inflation remains elevated this year, further rate hikes will be necessary. Some members felt there was already reason to raise rates last month, and officials are now evenly split on the economic outlook. The minutes specifically highlight Middle East conflict and tariff policy as two major inflation risks.
Even more notably, internal Fed concerns about "AI inflation" are rising rapidly. In April’s meeting minutes, "AI" was mentioned eight times, with only one reference to inflation. In June, "AI" appeared 20 times, seven directly tied to inflation risks. The minutes warn that feverish investment in AI infrastructure is now ranked alongside tariffs and oil prices as one of the Fed’s top three inflation threats. This signals that inflation pressures are not just short-term disruptions from geopolitics, but are forming a structural trend driven by multiple factors.
Markets are digesting these signals quickly. According to CME "FedWatch" data, the probability of the Fed holding rates steady in July is 69%, while the chance of a cumulative 25-basis-point hike has risen to 31%. By September, the probability of a 25-basis-point hike reaches 51.9%, and a 50-basis-point hike stands at 17%. Money markets have moved expectations for the next Fed rate hike forward from December to October. Global government bond markets are experiencing heavy sell-offs—two-year US Treasury yields are approaching 2026 highs, and ten-year yields briefly broke above 4.6%.
Veteran Wall Street analyst and Yardeni Research President Ed Yardeni put it bluntly: "Inflation fears are back, and the Fed is once again at the center of market attention. The Fed isn’t just tightening—it may actually have to tighten further."
The Logic Behind Gold’s Pressure: The "Interest Rate Curse" of Non-Yielding Assets
At this point, the chain of logic behind gold’s decline is clear.
Gold, as a non-yielding asset, has its holding cost directly determined by real interest rates. When inflation expectations rise and markets start betting on rate hikes, real rates climb—the opportunity cost of holding gold increases, and capital naturally flows toward assets that generate interest. This is the core mechanism behind gold’s "counterintuitive" drop amid this round of geopolitical conflict.
Spot gold on Wednesday touched its lowest level since July 1 at $4,021.70 per ounce, rebounding slightly to around $4,070 but still posting four consecutive days of losses. Spot silver dropped to $58 per ounce during the day. COMEX gold futures closed down 1.7%, and silver futures fell 4.3%.
Rising rates are the main driver behind gold’s price decline. As a non-yielding asset, gold loses appeal when cash rates increase. This doesn’t mean gold’s safe-haven function has failed—it’s simply that higher-level macro forces, namely monetary policy expectations, are now overpowering the short-term impact of geopolitics.
Bitcoin’s New Pricing Paradigm: From "Digital Gold" to "Interest Rate Mirror"
Bitcoin’s situation is even more complex—it faces pressure from two directions.
On one hand, as a risk asset, Bitcoin is highly sensitive to global liquidity and risk appetite. When rate hike expectations intensify and liquidity tightens, risk assets come under pressure. Bitcoin’s 7.63% drop over seven days and 10.73% decline over 30 days directly reflect this logic. On the other hand, some investors have long viewed Bitcoin as "digital gold" and an inflation hedge. If this narrative held true, the inflation fears triggered by geopolitical conflict should have boosted Bitcoin’s price. But the reality is just the opposite.
This reveals a structural shift in Bitcoin’s pricing logic.
Looking back at several geopolitical events in 2026, Bitcoin’s response has been noticeably inconsistent: In February, US and Israel airstrikes on Iran pushed gold higher while Bitcoin fell; in May, US-Iran negotiations saw Bitcoin mostly track US equities; and now, with the US launching large-scale strikes, Bitcoin again fails to break out independently. A clear trend is emerging: Bitcoin’s pricing power is shifting from "geopolitics" to "US dollar liquidity."
The market increasingly views war-related shocks as rate events, not unique to crypto. Bitcoin now tracks short-term Treasury yields more closely than traditional hedges like oil or gold. This means that when surging oil prices prompt markets to reprice the rate hike path, Bitcoin faces systemic pressure from the interest rate side, rather than benefiting from a geopolitical risk premium.
CoinDesk’s analysis offers a key framework: If Bitcoin holds above $60,000 despite further escalation in Hormuz while gold continues to slide, the trend of capital exiting traditional hedges is real, and Bitcoin is being repriced as an interest rate asset rather than a risk asset. As of July 9, Bitcoin is consolidating near $62,000, with its daily trading range narrowing to $61,800–$62,100. The crucial $60,000 psychological level is being tested.
Conclusion: The End of the Transmission Chain
From the gunfire in the Strait of Hormuz, to the price boards at gas stations, to the Fed’s meeting room, and finally to the trading terminals for gold and Bitcoin—every link in this transmission chain was fully validated on July 9.
Strait of Hormuz disruption → Oil supply shock → Oil price surge → Rising inflation expectations → Stronger rate hike expectations → Pressure on non-yielding assets (gold) and risk assets (Bitcoin).
This isn’t a chain of reasoning that requires complex assumptions—it’s been fully confirmed by recent market price movements. WTI crude jumped over 4% in a single day, Brent rose more than 5%. Gold fell for four straight days, breaking below $4,100. Bitcoin dropped over 7% in seven days, and market sentiment plunged into "extreme fear." These seemingly contradictory market phenomena are actually synchronous reflections of the same transmission chain across different asset classes.
For participants in the crypto market, this framework offers a more explanatory path than "war benefits Bitcoin" or "safe-haven flows." As geopolitical conflict continues to escalate, the real question may not be where the next missile lands, but how many percentage points the Fed’s rate hike probability rises when the next inflation data is released.
FAQ
Q: Traditionally, geopolitical conflict benefits gold. Why is gold falling this time?
The core logic behind gold’s decline is "oil price surge → rising inflation expectations → stronger rate hike expectations → pressure on non-yielding assets." As a non-yielding asset, gold’s holding cost rises with real interest rates. When the market starts betting on Fed rate hikes, capital flows out of gold, and the safe-haven effect of geopolitics is overwhelmed by the suppressive impact of macro monetary policy.
Q: Has Bitcoin’s safe-haven function failed?
Bitcoin’s safe-haven narrative is undergoing structural adjustment. Multiple geopolitical events in 2026 show that Bitcoin’s pricing logic has shifted from a "geopolitical barometer" to a "US dollar liquidity mirror." The market now treats war shocks as rate events, so Bitcoin tracks US Treasury yields more closely than oil prices. This doesn’t mean the "digital gold" narrative is dead—it’s just that Bitcoin’s pricing mechanism is becoming more mature and complex.
Q: How significant is the impact of the Hormuz conflict on global inflation?
About 30% of global seaborne oil trade passes through the Strait of Hormuz. Tanker traffic has "essentially stopped," directly pushing up international oil prices—WTI jumped over 4% in a single day, Brent over 5%. Oil price increases drive inflation both directly (through energy’s weight in the consumer basket) and indirectly (by raising production costs for industrial goods and end products). The Fed’s June meeting minutes already listed Middle East conflict as one of the top three inflation risks.
Q: What are the odds of a Fed rate hike in 2026?
As of July 9, CME "FedWatch" data shows the market expects a 51.9% chance of a cumulative 25-basis-point hike by September, and a 17% chance of a 50-basis-point hike. Money markets have moved the expected first rate hike forward from December to October. The Fed’s June minutes indicate that out of 19 officials, nine believe at least one rate hike is needed this year. The key variables for rate hike odds remain oil prices and inflation data.
Q: Why is the $60,000 level so critical for Bitcoin?
$60,000 is currently Bitcoin’s most important technical and psychological support. CoinDesk analysis notes that if Bitcoin holds above $60,000 despite further escalation in Hormuz, it signals the market is repricing Bitcoin as an interest rate asset rather than a risk asset. If it breaks below this level, it suggests previous resilience may have been due to thin trading rather than structural change. This threshold will determine Bitcoin’s medium-term direction.
