Gold fell on Tuesday as markets weighed mixed signals from the US-Iran conflict. Spot gold dropped 0.6% to around $4,540 an ounce in early trading. Gold futures also declined 0.3% to $4,543.62 an ounce.
The drop came after gold had briefly recovered on Monday. Bargain buyers stepped in after prices hit a two-and-a-half month low.
President Trump said Monday he had authorized new military strikes against Iran but chose to hold off. Leaders from Qatar, Saudi Arabia, and the United Arab Emirates asked for more time to pursue diplomacy.
Markets reacted cautiously to the news. While oil prices slid after Trump’s comments, uncertainty over a lasting resolution kept investors on edge.
Treasury yields remained near multi-year highs on Tuesday. High yields reduce the appeal of gold, which pays no interest.
The dollar also edged up 0.2%, making gold more expensive for buyers using other currencies. Both factors added downward pressure on the metal.
Global bond markets had been under heavy selling pressure in recent days. US 10-year yields fell 0.6% on Monday evening after Trump’s comments, offering some brief relief.
Japanese 10-year bond yields had also pulled back slightly from 29-year peaks. The bond selloff had been driven by fears of rising inflation tied to the Iran war.
The conflict has caused disruptions in the Strait of Hormuz, a key route for global oil supplies. Oil prices remain elevated despite Tuesday’s dip, keeping inflation concerns alive.
Gold has fallen nearly 14% since the Iran conflict started. The metal has traded in a narrow range in recent weeks as markets balance inflation fears against the possibility of interest rate cuts.
Vasu Menon, a strategist at Oversea-Chinese Banking Corp, said the situation in the Middle East, oil prices, and bond yields may continue to weigh on gold in the short term. He still sees gold as a useful hedge against global uncertainties.
Goldman Sachs kept its year-end gold price target at $5,400 an ounce. The bank cited expectations of strong central bank buying as a key reason for its bullish view.
Silver also declined on Tuesday, falling 2.2% to $76.05 an ounce. Platinum and palladium moved lower as well.
Trump has repeatedly threatened military action against Iran and then pulled back, creating volatility across markets. Traders are watching for any firm signals on whether diplomacy will succeed or fighting will resume.
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