Gold prices moved lower in Asian trading on Tuesday, retreating after earlier gains as rising oil prices and a more hawkish stance from the Bank of Japan heightened concerns about inflation linked to the Iran conflict.
Spot gold dropped 1% to $4,633.29 an ounce, while gold futures also slipped 1% to $4,646.90/oz by 02:32 ET (06:32 GMT).
Other precious metals weakened as well. Spot silver fell 3.2% to $75.1425/oz, while platinum declined 1.3% to $1,961.71/oz.
BOJ holds policy steady but flags inflation risks; Fed decision ahead
Gold’s decline followed the Bank of Japan’s decision to leave interest rates unchanged, while signaling a more hawkish outlook due to rising inflation risks tied in part to the Iran war.
The central bank increased its inflation forecast for fiscal 2026 and pointed to elevated oil and fuel costs as key drivers of price pressures.
The BOJ’s comments come just ahead of the Federal Reserve’s two-day meeting conclusion. Although the Fed is expected to keep rates on hold, markets are wary that policymakers could adopt a firmer tone on inflation.
Recent data for March already showed a notable rise in price pressures, reinforcing those concerns.
The U.S. dollar edged higher during Asian hours, building on gains recorded last week.
This meeting is also expected to mark the final one under Fed Chair Jerome Powell before his term ends on May 15. He is set to be replaced by former Fed governor Kevin Warsh, who recently appeared before Congress for his confirmation hearing.
Iran tensions persist as Hormuz talks remain unresolved
There has been little sign of progress in U.S.-Iran relations, with both sides still at odds over the Strait of Hormuz and Iran’s nuclear ambitions.
Iran reportedly put forward a proposal earlier this week to reopen the vital shipping route, but Washington has expressed doubts, particularly as the plan would delay discussions over Tehran’s nuclear program.
Efforts to revive direct negotiations stalled over the weekend after both countries declined to meet in Pakistan, leaving uncertainty around future diplomatic engagement.
The inflationary impact of the conflict—combined with oil prices climbing toward levels last seen in 2022—has weighed on gold. Rising expectations for higher interest rates have reduced the appeal of non-yielding assets like bullion, overshadowing its traditional safe-haven role.
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