TLDR
- Gold retreated following a four-session advance as US dollar strength counterbalanced safe-haven buying linked to Middle East hostilities
- Military operations by US and Israeli forces in Iran resulted in the death of Supreme Leader Khamenei, triggering Iranian missile strikes regionally
- Silver plummeted as much as 7.1%, with platinum and palladium posting significant losses
- Brent crude surged past $80 per barrel, fueling inflation concerns and pushing Fed rate cut expectations to September or later
- Dubai’s precious metals shipments halted following UAE airspace restrictions and airline service suspensions affecting logistics networks
Gold prices declined Tuesday, ending a four-session winning streak as the strengthening US dollar weighed on the precious metal despite intensifying Middle East geopolitical tensions.
Spot gold traded at $5,316.38 per ounce during Singapore hours after reaching an intraday peak of $5,379.65.
The pullback coincided with the US Dollar Index advancing nearly 1% week-to-date, marking its strongest level since late January. An appreciating greenback typically pressures gold by increasing its cost for international buyers.
Gold had gained over 3% during the prior four trading sessions as investors sought refuge following dramatic developments in the Middle East.
Over the weekend, coordinated US and Israeli military strikes targeted Iran, resulting in the death of Supreme Leader Ayatollah Ali Khamenei along with multiple high-ranking Iranian military officials.
Tehran retaliated with missile attacks throughout the region. The confrontation has expanded into Lebanon, while Kuwait’s air defense systems reportedly shot down American aircraft in what officials described as friendly fire.
President Trump indicated military operations could persist for multiple weeks and noted ongoing uncertainty regarding Iran’s leadership transition following Khamenei’s death.
Iran issued threats to shut down the Strait of Hormuz, a critical chokepoint for international crude oil transport. The development propelled oil prices significantly higher, with Brent crude exceeding $80 per barrel Tuesday.
Rate Cut Hopes Pushed Back
Elevated oil prices have intensified inflation worries across the United States. Market participants now anticipate the Federal Reserve will not reduce interest rates before September, representing a delay from earlier projections.
The Institute for Supply Management reported that manufacturing input costs accelerated at their quickest rate since 2022 during February. JPMorgan CEO Jamie Dimon cautioned that inflation risks could pose challenges for the American economy.
Since gold generates no yield, postponed rate reductions diminish its attractiveness compared to interest-bearing instruments like bonds and savings accounts. This dynamic limited the metal’s upside despite war-related uncertainty.
Precious Metals Shipments Disrupted
Silver experienced steep losses, plunging as much as 7.1% Tuesday to $86.37 per ounce. Platinum dropped 4% to $2,224.06, while palladium similarly declined.
The regional conflict has severely impacted physical precious metals transportation. The UAE implemented airspace closures throughout the weekend, grounding gold and silver shipments typically transported in commercial aircraft cargo compartments.
Multiple trading houses and logistics providers reported indefinite suspension of metal shipments to and from Dubai. Ground transportation to alternative regional airports presents excessive security risks for high-value cargo.
Swiss banking institution UBP indicated gold possesses “ample scope” to test its record high above $5,595 per ounce should hostilities continue for several weeks.
Tuesday witnessed drone attacks on the US embassy in Riyadh. President Trump pledged American retaliation.
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