Gold prices declined on Tuesday, surrendering much of the previous session’s advance as traders continued to assess developments surrounding a potential ceasefire between the United States and Iran.
The precious metal swung between gains and losses before slipping to around $4,538 an ounce. President Donald Trump said on Monday that he had approved a new series of attacks against Iran this week but decided to delay action after requests from three Gulf allies seeking additional time for negotiations over a nuclear agreement.
According to Trump, the leaders of Qatar, Saudi Arabia and the United Arab Emirates urged him to postpone military action because they believed a deal could still be reached with Iran that would satisfy U.S. demands. Earlier, Axios reported that the White House viewed a proposal delivered by Iran through Pakistani mediators on Sunday as lacking meaningful progress.
Meanwhile, Treasury yields remained close to multiyear highs as persistently elevated energy prices continued to fuel inflation concerns. Higher yields tend to reduce the attractiveness of non-interest-bearing assets such as gold. At the same time, the dollar strengthened by 0.2%, making bullion more expensive for buyers using other currencies.
Gold has largely traded within a narrow range after dropping sharply during the early stages of the conflict, as fears over inflation were tempered by expectations that slowing growth could eventually lead to monetary easing. Since the outbreak of the war, bullion prices have fallen nearly 14%.
The “fluidity with regards to the situation in the Middle East along with oil prices and bond yields” may still weigh on gold in the short term, said Vasu Menon, a strategist at Oversea-Chinese Banking Corp. “We continue to see gold as a useful hedge against global uncertainties given significant political and economic changes happening globally, which look set to gather pace in the coming years,” he added.
Spot gold was down 0.7% at $4,536.52 an ounce as of 1:35 p.m. in Singapore. Silver fell 2% to $75.80, while platinum and palladium also moved lower.