Global gold prices edged higher on Tuesday, recovering part of the losses recorded earlier in the week, as tentative calm returned to the Persian Gulf following a brief but intense escalation in hostilities between the United States and Iran.
Bullion climbed as much as 0.8 percent in early trading to hover above $4,550 per ounce, reversing some of Monday’s 2 percent decline. The rebound came as a ceasefire between the two geopolitical rivals appeared to hold, after clashes involving commercial shipping in the Strait of Hormuz and missile strikes targeting the United Arab Emirates rattled global markets.
Despite gold’s traditional role as a safe-haven asset during geopolitical turmoil, the current conflict has produced a counterintuitive effect. Since tensions escalated in late February, bullion prices have declined by more than 13 percent, weighed down by rising energy costs and shifting expectations around U.S. monetary policy.
The spike in oil prices has complicated the inflation outlook, reducing the likelihood that the Federal Reserve will cut interest rates in the near term. Higher-for-longer rates typically diminish the appeal of non-yielding assets such as gold, placing downward pressure on prices even amid geopolitical uncertainty.
Analysts at State Street Investment Management noted that gold could still find support if the Fed maintains its current stance while signaling eventual easing. “Gold can perform if the Fed is on hold, provided forward guidance points toward future rate cuts,” said strategist Aakash Doshi and his team. They added that even in a more hawkish scenario, bullion is likely to find a price floor around $4,000 per ounce.
Market participants are now turning their attention to upcoming signals from Washington, including the U.S. Treasury’s borrowing plans for the next quarter and a slate of key economic data releases that could shape interest rate expectations.
As of mid-morning trading in London, spot gold was up 0.7 percent at $4,554.17 per ounce. Other precious metals also advanced, with silver gaining 1.3 percent to $73.70, while platinum and palladium posted modest increases. Meanwhile, the Bloomberg Dollar Spot Index ticked slightly higher, reflecting continued strength in the U.S. currency.
