Gold prices extended losses on Tuesday, hovering close to a one-and-a-half-month low, as rising inflation concerns and expectations of higher US interest rates reduced investor appetite for the precious metal. Other precious metals also declined. Silver fell 6.01% to $73.9 per ounce, platinum slipped 3% to $1,919.2, while palladium dropped 3.9% to $1,359.9.
Gold was down 1.5% to $4,507.88 per ounce as of 7.30 pm Indian time. The metal had earlier touched its lowest level since March 30 at $4,479.54 in the previous session on Monday.
Market sentiment remained under pressure as investors reassessed the outlook for US monetary policy amid escalating geopolitical tensions in West Asia.
According to Reuters, analysts said concerns over prolonged instability in the Persian Gulf were strengthening expectations that the US Federal Reserve may keep interest rates elevated for longer to contain inflationary pressures.
“Hawkish Federal Reserve expectations, driven by inflationary fears stemming from a protracted standoff in the Persian Gulf, are weighing on the precious metal,” ActivTrades analyst Ricardo Evangelista told Reuters.
Investors are closely tracking developments surrounding tensions between the United States and Iran, as any escalation could influence energy prices, inflation expectations and the Fed’s policy trajectory.
10-year US Treasury yields remain high
Benchmark 10-year US Treasury yields remained near more than one-year highs on Tuesday. Rising Treasury yields typically reduce the appeal of gold because the metal does not offer interest income, increasing the opportunity cost of holding it.
Meanwhile, Brent crude oil prices eased slightly but stayed above $110 per barrel after disruptions linked to the West Asia conflict effectively shut the strategically critical Strait of Hormuz.
Investors are also awaiting the release of minutes from the Fed’s latest policy meeting on Wednesday for further signals on future interest rate decisions.
On the geopolitical front, US President Donald Trump said he had paused a planned attack on Iran after Tehran proposed peace talks, adding there was now a “very good chance” of reaching a nuclear agreement.