Gold prices posted a modest rebound on Tuesday after dropping to a five-week low in the previous session, though upside remained limited as elevated oil prices continued to cloud the interest rate outlook.
As of 05:59 ET (09:59 GMT), spot gold rose 0.7% to $4,556.35 per ounce, while gold futures also gained 0.7% to $4,566.35 per ounce. The metal had declined more than 2% a day earlier, marking its weakest level since late March.
Geopolitical Risks Keep Pressure on Gold
Despite the slight recovery, gold remained under pressure as tensions between the United States and Iran escalated again. Both sides launched fresh strikes on Monday in the Strait of Hormuz, a critical artery for global energy supplies, putting an already fragile truce at risk.
The U.S. military said it destroyed six Iranian attack boats during clashes in the waterway. Iran expanded the conflict by striking the United Arab Emirates, where a key oil installation in Fujairah was set ablaze.
These developments coincide with U.S. President Donald Trump’s “Project Freedom” initiative, which aims to escort ships and restore shipping activity through the strait. While the plan has raised hopes of easing supply bottlenecks, uncertainty persists over whether tensions could escalate further.
Inflation Concerns Limit Upside
Renewed fighting has heightened fears of prolonged disruption in the Gulf, pushing oil prices higher. On Tuesday, Brent crude dipped slightly amid signs that U.S. efforts may be weakening Iran’s control over the passage, although prices remain significantly 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 Show Mixed Moves
Even with geopolitical tensions in focus, gold has struggled to regain strong upward momentum, with prices still more than 10% lower since the conflict began in late February. Inflation worries, expectations of sustained higher interest rates, and a stronger U.S. dollar have all reduced demand for bullion. A firmer dollar also makes gold more expensive for buyers outside the United States.
Among other precious metals, silver climbed 1.3% to $73.7140 per ounce, while platinum advanced 1.8% to $1,980.86 per ounce.
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