TLDR
- Gold wavered after a four-day rally as a stronger US dollar offset safe-haven demand from the Middle East conflict
- US and Israeli forces struck Iran, killing Supreme Leader Khamenei, prompting Iranian missile retaliation across the region
- Silver dropped as much as 7.1%, while platinum and palladium also declined sharply
- Brent crude topped $80 a barrel, stoking inflation fears and reducing expectations of a Fed rate cut before September
- Gold shipments from Dubai have been paused as UAE airspace closures and airline suspensions disrupted precious metals logistics
Gold slipped on Tuesday after a strong four-day run, as a rising US dollar pushed prices lower despite growing tensions in the Middle East.
Spot gold fell to $5,316.38 an ounce in Singapore trading. Earlier in the session, it had climbed as high as $5,379.65.
The drop came as the US Dollar Index gained nearly 1% on the week, hitting its highest level since late January. A stronger dollar makes gold more expensive for buyers using other currencies.
Gold had risen more than 3% over the previous four sessions. Investors had been moving into safe-haven assets following a major escalation in the Middle East.
US and Israeli forces launched large-scale strikes on Iran over the weekend. The attacks killed Supreme Leader Ayatollah Ali Khamenei and several senior Iranian commanders.
Iran responded with missile strikes across the region. The conflict has spread to Lebanon, and Kuwaiti air defences reportedly downed US jets in a case of mistaken identity.
President Trump said the military operation could continue for several weeks. He also acknowledged uncertainty within Iran’s leadership following Khamenei’s death.
Iran threatened to block the Strait of Hormuz, a key route for global oil shipments. This sent oil prices sharply higher, with Brent crude topping $80 a barrel on Tuesday.
Rate Cut Hopes Pushed Back
Higher oil prices have raised inflation concerns in the US. Traders are now pricing in a Fed rate cut no earlier than September, later than previously expected.
Manufacturing input prices rose at their fastest pace since 2022 in February, according to the Institute for Supply Management. JPMorgan CEO Jamie Dimon warned inflation could become a problem for the US economy.
Gold does not pay interest, so delayed rate cuts reduce its appeal relative to bonds and cash. This capped the metal’s gains even as the war escalated.
Precious Metals Shipments Disrupted
Silver fell sharply, dropping as much as 7.1% on Tuesday to $86.37 an ounce. Platinum fell 4% to $2,224.06, and palladium also declined.
The conflict has disrupted the physical movement of precious metals. The UAE closed its airspace over the weekend, grounding shipments of gold and silver carried in commercial aircraft cargo holds.
Several trading and logistics firms said their metal shipments to and from Dubai had been paused indefinitely. Land transport to other regional airports is considered too risky for high-value cargo.
Swiss bank UBP said gold has “ample scope” to challenge its record high above $5,595 an ounce if the conflict extends for several weeks.
On Tuesday, two drones attacked the US embassy in Riyadh. President Trump said the US would respond.
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