TLDR
- Gold retreated following four consecutive sessions of gains as US dollar appreciation countered safe-haven buying linked to Middle East tensions
- Military operations by US and Israeli forces targeted Iran, resulting in the death of Supreme Leader Khamenei and triggering Iranian missile responses throughout the region
- Silver experienced a decline of up to 7.1%, accompanied by significant losses in platinum and palladium markets
- Brent crude oil surged past $80 per barrel, intensifying inflation concerns and pushing Fed rate cut expectations to September or beyond
- Dubai-based gold logistics operations remain suspended following UAE airspace restrictions and widespread airline service interruptions
Gold prices moved lower on Tuesday, ending a four-session winning streak as the strengthening US dollar exerted downward pressure that outweighed safe-haven demand stemming from Middle East hostilities.
Spot gold reached $5,316.38 per ounce during Singapore market hours. The session had seen prices peak at $5,379.65 earlier in the day.
The decline occurred alongside a nearly 1% weekly advance in the US Dollar Index, which reached levels last observed in late January. Dollar appreciation increases the cost of gold for international buyers conducting transactions in alternative currencies.
Gold had accumulated gains exceeding 3% during the preceding four trading sessions. Market participants had been shifting capital toward safe-haven instruments following significant intensification of Middle East hostilities.
Large-scale military strikes on Iran were conducted by US and Israeli forces during the weekend. These operations resulted in the deaths of Supreme Leader Ayatollah Ali Khamenei along with multiple high-ranking Iranian military officials.
Iran launched retaliatory missile attacks targeting various locations throughout the region. The confrontation has expanded into Lebanon, while Kuwaiti air defense systems reportedly engaged US aircraft in an incident attributed to identification errors.
President Trump indicated the military campaign could persist for multiple weeks. He also noted the uncertainty surrounding Iran’s leadership structure following Khamenei’s death.
Iranian officials issued warnings about potential closure of the Strait of Hormuz, a critical passage for international oil transportation. This development propelled oil prices significantly higher, pushing Brent crude beyond $80 per barrel on Tuesday.
Rate Cut Expectations Shift Later
Elevated oil prices have amplified inflation worries across the United States. Market participants currently anticipate Federal Reserve rate reductions beginning in September at the earliest, representing a delay from prior forecasts.
The Institute for Supply Management reported that manufacturing input costs increased at their most rapid pace since 2022 during February. JPMorgan CEO Jamie Dimon expressed concerns that inflation could pose challenges for the American economy.
Gold generates no yield, making postponed rate reductions less favorable for the metal compared to interest-bearing instruments like bonds and cash equivalents. This dynamic limited the precious metal’s upward momentum despite ongoing conflict escalation.
Physical Metal Distribution Faces Obstacles
Silver experienced substantial losses, declining as much as 7.1% on Tuesday to reach $86.37 per ounce. Platinum decreased 4% to $2,224.06, while palladium also registered declines.
The regional conflict has created significant obstacles for physical precious metals distribution networks. UAE authorities implemented airspace closures during the weekend, halting gold and silver shipments typically transported in commercial aircraft cargo compartments.
Multiple trading houses and logistics providers reported indefinite suspensions of metal shipments traveling to and from Dubai. Ground transportation to alternative regional airports presents excessive security risks for high-value cargo operations.
Swiss banking institution UBP indicated gold possesses “ample scope” to test its record peak above $5,595 per ounce should the conflict continue for multiple weeks.
On Tuesday, drone attacks targeted the US embassy located in Riyadh. President Trump announced the US would deliver a response to the incident.
