Gold Steady as Geopolitical Risks Offset Rate Decision Caution

Gold trimmed its modest early gains on Tuesday, hovering near the flat line around $5,010 per ounce, as traders weighed ongoing geopolitical risks against caution ahead of a series of key monetary policy decisions due this week. The precious metal continues to draw support from sustained safe-haven demand, driven by heightened uncertainty surrounding the ongoing conflict in Iran. Tensions escalated further after Iran launched fresh attacks on the UAE on Tuesday, raising the risk of a broader regional conflict now entering its third week. However, rising energy prices have reignited inflation concerns, prompting investors to scale back expectations for interest rate cuts later this year. Major central banks, including those in the US, Eurozone, UK, and Japan, are widely expected to keep rates unchanged, with market attention focusing on policymakers’ guidance and how they plan to navigate the economic fallout from the escalating conflict.

Gold edged higher to around $5,020 per ounce on Tuesday but remained close to its lowest level in nearly a month, as traders continued to assess the impact of the Middle East conflict on inflation and monetary policy outlook. The US-Israeli conflict with Iran is now in its third week, with Iran intensifying strikes on energy infrastructure across the region, while President Trump has warned of direct attack on Iran’s oil facilities on Kharg Island. The conflict has kept energy prices elevated, fueling concerns that sustained increases could further stoke inflation and reinforce a hawkish stance among central banks. The Federal Reserve is widely expected to hold rates steady this week, while other major central banks, including the ECB, BOE, and BOJ are also anticipated to maintain their current policy settings. Meanwhile, President Trump reiterated his call for help from other nations to secure the Strait of Hormuz, although several countries have declined to participate.

Gold prices eased toward $5,000 per ounce on Monday as cooling energy prices and a slight retreat in the US dollar offset safe-haven demand from the Middle East conflict. Bullion previously faced pressure from a sharp rise in Treasury yields, yet the market is stabilizing after US Treasury Secretary Scott Bessent indicated that Iranian tankers are being allowed to transit the Strait of Hormuz. This development helped West Texas Intermediate crude fall back toward $95 a barrel, supporting a rebound in global equity markets and a decline in the US 10-year Treasury note yield. The persistent safe-haven appeal of gold remains as the US-Israeli war with Iran enters its third week, but the metal faces a technical headwind from the Federal Reserve which is widely expected to maintain a restrictive policy stance this week. Investors are monitoring reports of a potential multinational coalition to escort shipping, as de-escalation could dampen the risk premium.