Key Highlights
- Gold futures declined 0.4% to reach $4,666.70 per troy ounce amid geopolitical uncertainty
- Trump issued an 8 p.m. ET Tuesday ultimatum for Iran to reopen the Strait of Hormuz
- The waterway handles approximately one-fifth of the world’s oil transit
- China’s central bank extended its gold purchasing streak to 17 consecutive months, now holding 74.38 million troy ounces
- The U.S. dollar index reached 100.03, climbing approximately 0.8% in the past month and weighing on precious metals
Precious metals markets displayed divergent behavior on Tuesday across different trading venues. New York futures contracts retreated 0.4% to settle at $4,666.70 per troy ounce, while spot gold climbed 0.8% to $4,685.54 per ounce during early trading hours. June delivery gold futures advanced 0.6% to $4,710.84 per ounce.
The fluctuating price action reflects market attention focused on President Donald Trump’s ultimatum to Iran regarding the Strait of Hormuz. The president established an 8 p.m. ET Tuesday deadline for Iran to accept a negotiated agreement or face military action targeting its energy sector.
Trump declared his intention to eliminate “every bridge” and “power plant” throughout Iran should the deadline expire without an agreement. He emphasized that reconstruction would require Iran “100 years to rebuild” following potential American military operations.
The Strait of Hormuz represents a critical chokepoint for global energy markets. Roughly one-fifth of worldwide oil shipments traverse the narrow waterway along Iran’s southern coastline.
Iranian officials have requested a comprehensive agreement encompassing sanctions removal, security assurances, and financial compensation for damages sustained. Intelligence reports indicate the White House administration appears unlikely to accommodate these demands.
Trump maintained openness to diplomatic channels, expressing that peaceful resolution of the confrontation remained achievable. The military engagement originated from coordinated American and Israeli operations against Iranian targets in late February.
Energy Markets and Currency Movements Create Headwinds
Brent crude maintained levels above $110 per barrel as the diplomatic deadline loomed. Elevated oil prices fuel concerns about inflation, potentially compelling central banks to maintain restrictive interest rate policies for extended periods.
This dynamic carries significant implications for gold. The precious metal generates no yield, making it less attractive during periods when interest rates remain elevated. Analysts from ANZ noted that Trump’s aggressive rhetoric “impacted risk appetite” and contributed to strengthening the U.S. dollar alongside rising Treasury yields.
The U.S. dollar index traded at 100.03, experiencing a modest 0.2% decline on Tuesday. Throughout the preceding month, the greenback appreciated roughly 0.8%. During this identical timeframe, spot gold experienced a decline exceeding 8%.
An appreciating dollar increases the cost of gold for international buyers transacting in alternative currencies, which tends to diminish purchasing activity.
Chinese Central Bank Maintains Gold Accumulation
One supportive element for gold emerged from China’s monetary authority. The People’s Bank of China expanded its gold reserves for the 17th consecutive month. Official holdings climbed to 74.38 million fine troy ounces by the conclusion of March, advancing from 74.22 million recorded in February.
Ongoing purchases by central banks provide a consistent foundation of demand for the precious metal.
Markets remained in a state of heightened alert Tuesday morning, anticipating the 8 p.m. ET deadline and any forthcoming response from Iranian leadership.
