Global oil prices retreated on Thursday after hitting a four-year high exceeding 126 dollars per barrel, amid fears that the war between the United States and Iran could escalate further, leading to long-term disruption of Middle East oil supplies and potentially damaging global economic growth.

Earlier in the day, prices surged after Axios reported late Wednesday, citing undisclosed sources, that U.S. President Donald Trump was scheduled to receive a briefing on Thursday regarding plans for a series of military strikes on Iran in an attempt to push the country back to negotiations over its nuclear program.

However, prices later declined without a clear catalyst.

Tamash Varga of oil brokerage PVM noted that the retreat did not appear to be linked to a specific development but rather reflected the high volatility that has characterized the market since the outbreak of the war with Iran on February 28. He added, "This simply reflects the unpredictable nature of trading in Trump’s world."

Global benchmark Brent crude futures fell by 2.05 dollars, or 1.7%, to 115.98 dollars per barrel by 10:16 GMT, after earlier reaching a session high of 126.41 dollars—the highest level since March 9, 2022. The prompt June delivery contract expires on Thursday.

Meanwhile, the more actively traded July contract stood at 109.93 dollars per barrel, down 51 cents or 0.5%.

Traders noted the execution of two large sell orders for June Brent futures shortly before 09:30 GMT, which was confirmed by LSEG data.

The Bank of England’s interest rate decision was released today, Thursday, at the conclusion of its April 30 meeting. In line with market expectations, the central bank kept interest rates unchanged at the 3.75% range, the lowest level since December 2022, marking the third consecutive meeting without a change.

• This statement is "positive" for the British pound.

The U.S. dollar retreated against the Japanese yen on Thursday after Japanese officials sent strong signals regarding potential intervention in the currency market, at a time when markets remain tense due to escalating Middle East friction.

Japanese Finance Minister Satsuki Katayama stated on Thursday that the timing for taking "decisive action" in the market is approaching.

The yen fell 0.55% to 159.45 against the dollar, after earlier hitting 160.72, its highest level since July 2024. The Japanese currency has declined by more than 2% since the outbreak of war on February 28.

Following its monetary policy meeting on Tuesday, the Bank of Japan indicated that it might raise interest rates in the coming months.

Investors are weighing the impact of rising oil prices—which tend to pressure the yen—against fears that Japanese authorities might intervene to support the currency near the 160 level.

Oil prices pressure Euro and Yen

Brent crude futures rose 2.5% following a report that the United States is considering military options to break the deadlock with Iran.

Demand for safe-haven assets had supported the dollar in March following the start of the war, reflecting the U.S. economy's lower exposure to high oil prices compared to the Eurozone and Japan.

Analysts believe a potential nuclear deal represents the primary hurdle to a Middle East peace agreement, as any deal that leaves Iran's nuclear program largely unchanged could be politically costly for the U.S. President domestically.

The dollar index fell 0.15% to 98.79 after recording 99.092, its highest level since April 13.

The Euro stabilized at 1.1680 dollars, while the British pound traded at 1.34877 dollars, showing little change.

The Bank of England and the European Central Bank are scheduled to hold their meetings later today, with markets awaiting their guidance amid growing expectations that they may soon be forced to raise interest rates.

Hawkish tilt from the Federal Reserve

U.S. Federal Reserve Chair Jerome Powell concluded his eight-year term by keeping interest rates unchanged amid mounting inflation concerns. The Fed's decision to hold rates was passed by an 8-4 vote, the largest split since 1992, with three dissents from officials who no longer see the need to signal a dovish bias toward monetary easing.

This hawkish tilt pushed bond yields higher, reaching their highest levels since March 27.

On Wednesday, traders scrapped bets on interest rate cuts this year, with markets now pricing in a 55% chance of a rate hike by April 2027, up from about 20% prior to the decision.

U.S. President Donald Trump expects Kevin Warsh, his nominee to succeed Powell on May 15, to cut interest rates. However, Warsh stated that he has made no such pledge to Trump.

Michael Pfister, currency strategist at Commerzbank, said:

"Current times might be suitable for cutting interest rates, and Warsh would have to convince his colleagues on the FOMC to take such action."

He added: "The dissents we saw yesterday show that this will not be easy, if he even wants to do it," referring to the removal of the easing bias.

Gold prices climbed by approximately 2% in the European market on Thursday, on track for their first gain in four days. This recovery comes as buyers move in at lower levels following a drop to a four-week low, further supported by a slight retreat of the U.S. dollar in the foreign exchange market.

In line with global market expectations, the Federal Reserve kept interest rates unchanged for the third consecutive meeting, while warning of elevated inflation driven by surging energy prices.

Price Overview

• Gold Prices Today: Gold rose by about 2.0% to ($4,629.73), from an opening level of ($4,543.95), after hitting a session low of ($4,539.48).

• At Wednesday's close, gold prices lost roughly 1.2%, marking a third consecutive daily decline and hitting a four-week low of 4,510.32 dollars per ounce due to the rise in the dollar, oil, and a hawkish Federal Reserve meeting.

The U.S. Dollar

The dollar index fell 0.25% on Thursday, retreating from a nearly three-week high and heading toward its first loss in three sessions. This reflects a cooling of the American currency against a basket of major and minor rivals.

Beyond profit-taking, the U.S. dollar is softening as diplomatic efforts continue to bridge views between the United States and Iran in hopes of a permanent peace agreement to reopen the Strait of Hormuz.

The Federal Reserve

At the conclusion of its third monetary policy meeting of the year, and in line with most forecasts, the Federal Reserve on Wednesday kept interest rates unchanged for the third consecutive meeting.

The Federal Open Market Committee (FOMC) voted 8 to 4 to maintain the benchmark federal funds rate at the 3.50% to 3.75% range, the lowest level since September 2022. The vote saw the most significant internal opposition within the Fed since 1992, as some members no longer see a need for the central bank to maintain a dovish tilt.

The policy statement noted that inflation remains "elevated" above the 2% target, impacted by rising energy and shipping costs resulting from the naval blockade on Iran and the closure of the Strait of Hormuz.

In his final press conference, Fed Chair Jerome Powell admitted that the conflict in the Middle East has created "new inflationary pressures" that were not anticipated. However, he stressed that the Fed would not hesitate to raise rates again if oil prices continue to climb. Powell expressed pride in the resilience of the U.S. economy against geopolitical shocks, maintaining that a "soft landing"—reducing inflation without a recession—remains possible.

Powell also sent an implicit message to his designated successor, Kevin Warsh, regarding the necessity of maintaining "central bank independence" from political pressure (a reference to Trump's frequent calls for rate cuts).

U.S. Interest Rates

• Following the meeting, according to the CME FedWatch Tool: The probability of keeping rates unchanged at the June meeting is currently priced at 99%, with a 1% probability of a 25-basis-point cut.

• To refine these probabilities, investors are closely monitoring upcoming U.S. economic data and further comments from Federal Reserve officials.

Gold Performance Forecast

Tim Waterer, chief market analyst at KCM Trade, stated: "Gold represents a valuable investment opportunity for traders at current levels. Therefore, dip-buying is playing a role in gold's recovery efforts today." Waterer added: "While gold is attempting a slight bounce from oversold levels, rising oil prices and the resulting new inflation risks are limiting its near-term upside."

SPDR Fund

Gold holdings at the SPDR Gold Trust decreased by 1.71 metric tons on Wednesday, marking the sixth consecutive daily decline. Total holdings fell to 1,039.20 metric tons, the lowest level since November 4, 2025.