TLDR
- Gold retreated following four consecutive days of gains as US dollar strength counterbalanced geopolitical risk demand from Middle East tensions
- Military operations by US and Israeli forces in Iran resulted in the death of Supreme Leader Khamenei, triggering Iranian missile counterattacks regionally
- Silver experienced a steep 7.1% decline, with platinum and palladium recording significant losses
- Brent crude surged past $80 per barrel, amplifying inflation concerns and pushing Fed rate cut expectations to September or later
- Precious metal shipments from Dubai remain suspended due to UAE airspace restrictions and airline service disruptions
Gold prices retreated on Tuesday following a four-session winning streak, as the strengthening US dollar outweighed safe-haven buying triggered by intensifying Middle East hostilities.
Spot gold declined to $5,316.38 per ounce during Singapore market hours. The precious metal had touched an intraday peak of $5,379.65 earlier in the trading session.
The downturn occurred as the US Dollar Index advanced nearly 1% over the weekly period, reaching its strongest position since January’s final days. An appreciating dollar increases the cost of gold for international buyers holding alternative currencies.
Gold had accumulated gains exceeding 3% across the prior four trading sessions. Market participants had been seeking refuge in defensive assets following dramatic escalation of Middle Eastern hostilities.
Combined US and Israeli military forces executed extensive strikes against Iranian targets throughout 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 attacks throughout the broader region. The military confrontation has expanded into Lebanese territory, and reports indicate Kuwaiti air defense systems mistakenly targeted US aircraft.
President Trump indicated the military campaign might persist for multiple weeks. He also noted continuing uncertainty regarding Iran’s power structure following Khamenei’s elimination.
Iranian authorities issued threats to shut down the Strait of Hormuz, a critical passage for worldwide petroleum transport. This development propelled oil prices significantly higher, with Brent crude exceeding $80 per barrel on Tuesday.
Rate Cut Hopes Pushed Back
Elevated oil prices have intensified inflationary pressures within the US economy. Market participants now anticipate the Federal Reserve will delay monetary easing until September at the earliest, representing a postponement from earlier forecasts.
The Institute for Supply Management reported manufacturing input costs increased at the most rapid rate since 2022 during February. JPMorgan CEO Jamie Dimon cautioned that inflation could pose significant challenges for the American economy.
Gold generates no yield, making postponed rate reductions less favorable compared to interest-bearing instruments like bonds and cash equivalents. This dynamic limited the metal’s upside potential despite escalating warfare.
Precious Metals Shipments Disrupted
Silver experienced substantial losses, plummeting as much as 7.1% on Tuesday to reach $86.37 per ounce. Platinum decreased 4% to $2,224.06, while palladium similarly recorded declines.
The regional conflict has severely impaired physical precious metals transportation. UAE authorities closed national airspace throughout the weekend, halting gold and silver shipments typically transported in commercial aircraft cargo compartments.
Numerous trading houses and logistics providers confirmed their metal deliveries to and from Dubai have been indefinitely suspended. Overland transportation routes to alternative regional airports are deemed excessively dangerous for high-value commodity shipments.
Swiss banking institution UBP suggested gold maintains “ample scope” to test its record high above $5,595 per ounce should the conflict persist for several weeks.
On Tuesday, two unmanned aerial vehicles struck the US embassy compound in Riyadh. President Trump confirmed the United States would deliver a response.
