TLDR
- Gold retreated following a four-session advance as US dollar strength countered safe-haven buying triggered by Middle East warfare
- Joint US-Israeli operations in Iran resulted in the death of Supreme Leader Khamenei, sparking Iranian missile counterattacks throughout the region
- Silver experienced a steep decline of up to 7.1%, with platinum and palladium posting significant losses as well
- Brent crude surpassed $80 per barrel, intensifying inflation worries and pushing back Federal Reserve rate cut timing to September at earliest
- Dubai-based gold shipments remain suspended following UAE airspace restrictions and airline service interruptions affecting precious metals transport
Gold prices declined on Tuesday following a robust four-session advance, pressured by a strengthening US dollar that offset heightened geopolitical tensions across the Middle East.
Spot gold traded at $5,316.38 per ounce during Singapore market hours. The precious metal had reached an intraday peak of $5,379.65 earlier in the session.
The pullback occurred as the US Dollar Index advanced nearly 1% during the week, reaching its strongest position since the final days of January. Currency appreciation makes gold costlier for international purchasers operating in non-dollar currencies.
Gold had appreciated over 3% throughout the preceding four trading sessions. Market participants had been allocating capital toward safe-haven instruments following significant Middle East military escalation.
Combined US and Israeli military forces executed extensive strikes against Iranian targets during the weekend. These operations resulted in the deaths of Supreme Leader Ayatollah Ali Khamenei and multiple high-ranking Iranian military officials.
Tehran launched retaliatory missile strikes throughout the region. Fighting has expanded into Lebanon, while Kuwaiti air defense systems allegedly shot down American aircraft in a friendly fire incident.
President Trump indicated the military campaign might persist for multiple weeks. He also recognized instability within Iran’s governing structure following Khamenei’s elimination.
Iran issued threats to obstruct the Strait of Hormuz, a critical passage for international petroleum transport. This development propelled oil valuations significantly higher, pushing Brent crude beyond $80 per barrel on Tuesday.
Rate Cut Hopes Pushed Back
Elevated oil prices have intensified inflation anxieties across the United States. Market participants now anticipate a Federal Reserve interest rate reduction no sooner than September, representing a delay from earlier forecasts.
Manufacturing input costs increased at their most aggressive rate since 2022 during February, based on Institute for Supply Management data. JPMorgan CEO Jamie Dimon cautioned that inflation could present challenges for the American economic landscape.
Gold generates no yield, making postponed rate reductions less favorable for the metal compared to interest-bearing alternatives like bonds and cash deposits. This dynamic limited the metal’s upward momentum despite ongoing military conflict.
Precious Metals Shipments Disrupted
Silver experienced a dramatic selloff, plummeting as much as 7.1% on Tuesday to reach $86.37 per ounce. Platinum declined 4% to $2,224.06, with palladium similarly posting losses.
The regional conflict has created obstacles for physical precious metals transportation. UAE authorities closed national airspace throughout the weekend, halting gold and silver cargo typically transported via commercial airline freight compartments.
Multiple trading and logistics operations reported that their metal shipments involving Dubai have been indefinitely suspended. Ground transportation alternatives to alternative regional airports are deemed excessively hazardous for valuable cargo.
Swiss financial institution UBP stated gold maintains “ample scope” to test its all-time high exceeding $5,595 per ounce should the military conflict persist for multiple weeks.
On Tuesday, two unmanned aerial vehicles struck the US embassy compound in Riyadh. President Trump pledged American retaliation.
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