Summary: Gold prices fell in Asian trading on Tuesday following reports of new U.S. military strikes on Iran, which eroded recent optimism about a possible framework deal to reopen the Strait of Hormuz. The dollar steadied and oil climbed back from recent declines, adding pressure on bullion and other precious metals.
Spot gold declined 0.8% to $4,535.17 an ounce by 21:37 ET (01:37 GMT), while gold futures also dropped 0.8% to $4,568.67 per ounce. The retreat in bullion came after a short-lived rally that had built up in previous sessions amid reports that Washington and Tehran were close to a framework agreement affecting shipping in the Strait of Hormuz.
Other precious metals registered losses. Spot silver was weaker by 2.1%, trading at $76.4495 per ounce, and spot platinum eased 0.6% to $1,955.02 per ounce.
Renewed military action reported on Monday evening altered market expectations. U.S. media reported that the strikes targeted missile launch sites and mine-laying boats in southern Iran. Those accounts undercut the prospect of a diplomatic breakthrough between the two countries and contributed to a shift in asset prices across commodities and currencies.
The reported U.S. strikes helped the dollar steady after recent declines. Oil prices, which had spent the prior week drifting lower, also rebounded on the news. That bounce in energy markets revived concerns about the inflationary consequences of continued conflict in the region.
Market participants interpreted the oil rebound as a potential driver of higher inflation, a worry that could prompt more hawkish responses from central banks globally. Such expectations around monetary tightening have been a significant headwind for gold prices this year.
In sum, the combination of fresh military activity, a firmer dollar and a rebound in oil cut short bullion's recent gains. The unfolding situation in and around the Strait of Hormuz remains a key variable for commodities and inflation expectations, with direct implications for precious metals and energy markets.
Data snapshot
- Spot gold: $4,535.17/oz, down 0.8% (21:37 ET / 01:37 GMT)
- Gold futures: $4,568.67/oz, down 0.8%
- Spot silver: $76.4495/oz, down 2.1%
- Spot platinum: $1,955.02/oz, down 0.6%