Market moves
Spot gold slipped 0.5% to $4,627.91 per ounce by 22:13 ET (02:13 GMT), while U.S. Gold Futures dropped 0.7% to $4,652.20. Prices had settled 0.6% lower on Monday after a volatile session, extending bullion's decline into a third straight day.
Geopolitical backdrop and inflation dynamics
The downward pressure on gold came even as tensions in the Middle East intensified. U.S. President Donald Trump warned that Iran could be “taken out” if it did not reopen the Strait of Hormuz by his Tuesday 8 p.m. ET deadline, increasing the risk of a wider regional confrontation. That standoff has already disrupted global energy flows and pushed oil prices higher, feeding into inflation concerns and complicating the outlook for monetary policy.
Typically, geopolitical uncertainty supports demand for safe-haven assets such as gold. In this episode, however, rising oil prices are elevating inflation expectations, which in turn dampen the market's hopes for near-term interest rate cuts by the U.S. Federal Reserve. Higher interest rates erode the appeal of non-yielding assets like gold, and a firmer dollar has also weighed on bullion.
Diplomatic developments
Efforts to defuse the crisis have shown limited progress. Iran rejected a U.S.-backed proposal for a 45-day ceasefire and phased reopening of the strait. Instead, Iran called for a permanent settlement that would include sanctions relief, security guarantees, and compensation for damages. The absence of a diplomatic breakthrough has increased uncertainty across financial markets, with investors closely monitoring developments around the presidential deadline.
Data and broader market implications
Market participants are also awaiting key U.S. inflation data due on Friday, which is expected to offer clues about the Fed's future interest rate trajectory. The interplay between energy-driven inflation pressures and monetary policy expectations is central to near-term price action in precious metals and broader financial markets.
Other metals
Among other precious metals, silver fell 1.2% to $71.94 per ounce, while platinum dropped 1.4% to $1,956.60 per ounce.