Gold prices moved modestly higher on Tuesday, recovering after falling to a five-week low in the previous session. However, gains remained limited as rising oil prices continued to cloud the outlook for interest rates.
By 05:59 ET (09:59 GMT), spot gold was up 0.7% at $4,556.35 per ounce, while gold futures also increased 0.7% to $4,566.35 per ounce. The metal had dropped more than 2% in the prior session, marking its weakest level since late March.
Conflict Keeps Pressure on Markets
Gold remained under strain amid renewed hostilities between the United States and Iran. Both sides carried out fresh attacks on Monday in the Strait of Hormuz, a key route for global energy supplies, putting a fragile ceasefire at risk.
The U.S. military reported destroying six small Iranian attack boats during confrontations in the strait. Iran also escalated tensions by launching strikes on the United Arab Emirates, where a major oil facility in the port city of Fujairah was set on fire.
These developments come as U.S. President Donald Trump’s “Project Freedom” initiative seeks to escort ships and restore shipping activity through the strait. While the plan has raised hopes of easing supply disruptions, uncertainty remains over the potential for further military escalation.
Inflation Concerns Weigh on Gold
Ongoing fighting has fueled concerns about prolonged instability in the Gulf, driving oil prices higher. On Tuesday, Brent crude edged lower slightly amid signs that U.S. efforts may be loosening Iran’s control over the strait, though prices remain well above pre-conflict levels.
“Higher energy prices mean inflation concerns are only growing, suggesting that rates will remain higher than originally anticipated. This has weighed on non-yielding assets, such as gold,” ING analysts said in a note.
“For now, the gold market appears less focused on the lingering geopolitical risk and more on rising Treasury yields,” they added.
Precious Metals Mixed
Despite geopolitical tensions, gold has struggled to regain upward momentum, with prices down more than 10% since the conflict began in late February. Inflation concerns, expectations of higher interest rates, and a stronger U.S. dollar have all reduced the appeal of the metal. A firmer dollar also makes gold more expensive for international buyers.
Among other precious metals, silver rose 1.3% to $73.7140 per ounce, while platinum gained 1.8% to $1,980.86 per ounce.