Gold prices fell to their lowest level in three weeks on Tuesday as rising oil prices fueled inflation concerns. Meanwhile, investors are closely monitoring key central bank decisions this week to determine if the ongoing war in the Middle East has altered interest rate forecasts.
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Market Figures
Spot Gold: Dropped 1.1% to $4,628.88 per ounce by 05:53 GMT, marking its lowest point since April 7.
U.S. Gold Futures (June delivery): Also declined 1.1% to $4,643.70.
Geopolitical Deadlock
A U.S. official reported that President Donald Trump is dissatisfied with the latest Iranian proposal to end the two-month-old war. This development has dampened hopes for a settlement in a conflict that has disrupted energy supplies, exacerbated inflation, and resulted in thousands of casualties.
Edward Meir, an analyst at Marex, commented:
"Geopolitical developments remain the primary driver [for gold prices]. Should a deal—or even an interim agreement—be reached [between the U.S. and Iran], the dollar should weaken, and gold would likely rise."
Economic Indicators and Interest Rates
The U.S. dollar edged up slightly while oil prices hovered above $110 per barrel, with the strategic Strait of Hormuz remaining almost entirely closed.
Rising crude prices threaten to spike inflation by increasing transportation and production costs, which in turn raises the likelihood of higher interest rates. While gold is traditionally a hedge against inflation, higher interest rates make yield-bearing assets more attractive, reducing the appeal of non-yielding bullion.
Central Bank Outlook
The U.S. Federal Reserve is widely expected to keep interest rates unchanged at the conclusion of its two-day meeting on Wednesday. Investors are also shifting their focus toward upcoming policy decisions from the European Central Bank (ECB), the Bank of England, and the Bank of Canada.
Other Precious Metals
Spot Silver: Plunged 3% to $73.23 per ounce.
Platinum: Fell 1.5% to $1,953.50.
Palladium: Dropped 2.1% to $1,445.50.
Source: Reuters
