Gold Pressured as US-Iran in Focus

Gold fluctuated around $4,650 per ounce on Tuesday, caught between cautious gains and losses as markets braced for US President Donald Trump’s ultimatum to Iran later today. The deadline demands Iran reopen the Strait of Hormuz and agree to a ceasefire, or face military retaliation. Yet, despite the looming threat, hostilities have escalated: Tehran reported explosions on Kharg Island and on the Yahya Abad railway bridge in Kashan, while vowing "beyond-the-region" retaliation if the US crosses its "red lines." Despite the geopolitical turmoil, gold remains 12% below its pre-conflict levels after suffering its worst monthly drop since 2008 in March. The Iran crisis has bolstered the US dollar and prompted traders to bet against Federal Reserve rate cuts, undermining gold’s appeal. Meanwhile, China’s central bank offered a rare bright spot, purchasing 160,000 troy ounces of gold in March, its largest addition in over a year, a move that could help shore up investor sentiment.

Gold inched up to $4,680 per ounce on Tuesday, recovering slightly after two consecutive sessions of losses, as markets adopted a cautious "wait-and-see" stance ahead of Trump’s ultimatum to Iran. The US president has demanded that Iran reopen the Strait of Hormuz and agree to a ceasefire, or face military retaliation. Despite the geopolitical tensions, gold remains well below its peak of above $5,000, as the Iran conflict continues to drive energy prices higher, stoking inflation concerns. This has led markets to anticipate that central banks may delay rate cuts, or even hike instead. The Federal Reserve, which had been expected to ease policy before the war, is now seen holding steady, while traders are pricing in two Bank of England rate hikes this year and three from the European Central Bank. The shifting monetary policy outlook has weighed on gold’s traditional safe-haven appeal.

Gold traded around $4,650 per ounce on Tuesday after falling for two straight sessions, remaining under pressure as investors focused on President Donald Trump’s threat to target Iranian civilian infrastructure unless his demands are met, heightening concerns about the economic impact of a prolonged conflict. Trump warned he could strike Iranian power plants and bridges if his conditions are not met by Tuesday 8 p.m. Eastern Time, including the reopening of the Strait of Hormuz. This overshadowed signs that the US and Iran may be moving closer to a ceasefire agreement through mediators. Gold remains down about 12% since the conflict began, as surging energy prices tied to the Iran war fueled inflation fears and increased the likelihood that central banks will delay cutting interest rates or even raise them. Markets now expect the Federal Reserve to keep rates unchanged through the rest of the year, compared with earlier projections of two rate cuts.