Gold prices fell slightly in Tuesday's trading session as the USD strengthened and the prospect of interest rate cuts became less bright, amid growing concerns about inflation due to the risk of prolonged Middle East conflict.
Spot gold prices fell 3.6% to $5.132.01/ounce. Previously, this precious metal had hit its highest level in more than four weeks in the previous trading session.
US gold futures closed down 3.5% to $5,123.70/ounce.
Mr. Bob Haberkorn, senior market strategist at RJO Futures, said that the decline in gold mainly stems from the trend of investors switching to holding cash. According to him, the strengthening USD along with increased bond yields has put pressure on the precious metal.
The USD – a safe-haven asset competing with gold – has increased sharply, making gold valued in USD more expensive for investors holding other currencies. Meanwhile, US Treasury bond yields also increased for the second consecutive session.
However, Mr. Haberkorn said that this drop in gold prices may only be temporary. Capital flows to safe assets due to geopolitical risks are still likely to support gold and silver prices in the near future.
On the geopolitical front, the conflict involving Iran has entered its fourth day, as explosions shake Tehran and Beirut. A senior official of the Iranian Revolutionary Guard Corps said on Monday that the Strait of Hormuz has been closed. Following this information, international standard crude oil prices rose more than 8% on Tuesday.
According to Mr. Fawad Razaqzada, market analyst at City Index and FOREX. com, damage to energy infrastructure and the cessation of oil tankers from moving through the Strait of Hormuz are increasing the risk of oil, gas and refined products prices remaining high for a long time. This has increased concerns about inflation and forced the market to reverse expectations of interest rate cuts, thereby weakening the upward momentum of gold.
Although often seen as a tool to hedge against inflation and instability, gold tends to be more favored in low-interest environments, as this precious metal does not yield yields.
Since the beginning of the year, spot gold prices have increased by about 19%, supported by global fluctuations, after increasing by 64% in 2025. Meanwhile, silver prices have also increased by more than 16% this year.
In other precious metals, spot silver prices fell 6.6% to 83.50 USD/ounce after just hitting a four-week high on Monday.
Platinum prices fell 8.4% to $2,108.51/ounce, while palladium fell 5.6% to $1,667.41/ounce.
