Gold Eases as Middle East Uncertainty Persists

Gold slipped below $4,550 an ounce on Tuesday, paring gains from the previous session as heightened uncertainty in the Middle East kept investors cautious about inflation risks. The US military reportedly targeted missile launch sites and vessels suspected of attempting to deploy mines in southern Iran, with US Central Command saying the operations were aimed at protecting American troops in the region. Meanwhile, President Donald Trump said talks with Tehran were progressing well, though he warned that additional attacks could follow if negotiations broke down. Gold prices remain down nearly 15% since the conflict began, as fears of an energy-driven inflation shock reinforced expectations that central banks could maintain tighter monetary policy for longer. Still, the sharp decline in oil prices over the past week has helped ease concerns about inflationary pressures and further interest rate hikes.

Gold traded above $4,550 an ounce on Tuesday after rising about 1% in the previous session, supported by indications that the US and Iran were moving closer to an agreement that could end the conflict and reopen the Strait of Hormuz. Negotiations between Washington and Tehran have reportedly centered on extending the ceasefire for roughly two months, during which the US would lift its blockade while Iran would allow shipping through Hormuz to resume. However, major obstacles remain, particularly over Iran’s nuclear program and its insistence on retaining control over maritime traffic in the strategic passage. Meanwhile, oil prices declined sharply, easing worries about inflationary pressures and the prospect of further interest rate hikes. Despite the recent rebound, gold prices are still down roughly 13% since the conflict began, as fears of an energy-driven inflation shock strengthened expectations that central banks could keep monetary policy tighter for longer.

Gold climbed toward $4,600 an ounce on Monday, recovering losses from last week as increasing optimism over a potential US-Iran agreement eased concerns about inflation and interest rate hikes. Reports indicated that the proposed deal could reopen the Strait of Hormuz, end hostilities, release some frozen Iranian assets, and lay the groundwork for additional negotiations aimed at restricting Tehran’s nuclear program. However, President Donald Trump said the US would keep its blockade of the Strait of Hormuz in place until a formal agreement is finalized. Despite Monday’s rebound, gold remains roughly 13% lower since the Middle East conflict began, as fears of an energy-driven inflation shock fueled expectations that central banks may need to maintain tighter monetary policy. Investors also continued to assess the outlook for Federal Reserve policy after Governor Christopher Waller signaled he no longer believed the central bank should retain an easing bias in its policy statement.