BY COMFORT OGBONNA
Gold prices traded cautiously on Tuesday as investors adopted a wait-and-see approach ahead of a critical deadline set by U.S. President Donald Trump for Iran to reopen the Strait of Hormuz. With geopolitical tensions rising and uncertainty dominating global markets, many traders chose to remain on the sidelines until clearer signals emerge about the next developments in the Middle East.
Spot gold edged slightly higher by 0.1% to $4,651.34 per ounce as of 0702 GMT. Meanwhile, U.S. gold futures for June delivery slipped 0.2% to $4,676.50. The relatively muted movement in prices reflected the cautious mood across financial markets, where investors are carefully monitoring both geopolitical risks and economic signals that could influence precious metal demand.
Market analysts say the current environment has left traders hesitant to make bold moves. According to Ilya Spivak, head of global macro at Tastylive, investors are largely waiting to see how the situation unfolds following several days of strong rhetoric and warnings from the U.S. administration. Many market participants believe the next major price movement in gold could depend heavily on the outcome of the standoff involving Iran and the United States.
Tensions in the region intensified further on Tuesday as Iran and Israel exchanged attacks. Tehran has refused to reopen the Strait of Hormuz or agree to a ceasefire proposal ahead of the deadline set by Washington. The strait is one of the world’s most important shipping routes for oil, and its closure has raised fears of a prolonged energy supply disruption.
Oil prices continued to climb as a result, remaining above $110 per barrel. The surge in energy costs has fueled fresh concerns about global inflation, as higher fuel prices typically feed into transportation costs, manufacturing expenses, and consumer prices worldwide.
Although gold is often viewed as a hedge against inflation, rising interest rates can limit its attractiveness. Unlike bonds or savings instruments, gold does not generate interest, meaning that higher borrowing costs can reduce its appeal compared with other yield-producing assets.
Recent comments from U.S. central bank officials have reinforced expectations that interest rates will remain elevated for some time. Cleveland Federal Reserve President Beth Hammack and Chicago Federal Reserve President Austan Goolsbee both signaled that controlling inflation remains a priority. Their remarks suggested that policymakers are more concerned about persistent price pressures than about slowing employment growth, reinforcing support for a tighter monetary policy stance.
Market expectations currently reflect little hope for interest rate cuts in the United States this year. According to data from the CME FedWatch tool, traders widely believe the Federal Reserve will maintain its current policy settings as inflation risks remain elevated.
Investors are also preparing for several important economic updates that could influence the outlook for both interest rates and precious metals. The minutes from the Federal Reserve’s March policy meeting are scheduled for release on Wednesday, offering additional insights into policymakers’ thinking. Later in the week, markets will also receive key inflation indicators, including the Personal Consumption Expenditures index and the Consumer Price Index, both closely watched gauges of price growth in the U.S. economy.
Despite the cautious trading environment, some analysts remain optimistic about gold’s long-term prospects. They argue that once geopolitical uncertainty subsides and markets adjust to the current policy environment, the metal could regain strong upward momentum.
Spivak noted that gold previously developed its own speculative narrative, rising sharply even when traditional market drivers suggested more modest gains. He suggested that a similar pattern could reappear once current market tensions ease. If that happens, he believes gold could climb significantly higher by the end of the year, potentially approaching levels between $5,500 and $6,000 per ounce.
Other precious metals also experienced declines during Tuesday’s trading session. Spot silver fell 0.7% to $72.28 per ounce. Platinum dropped 0.8% to $1,964.24, while palladium edged down 0.1% to $1,483.38 as investors reduced exposure to risk-sensitive commodities amid the ongoing geopolitical uncertainty.
For now, global markets remain focused on developments surrounding the Strait of Hormuz and the broader Middle East conflict. The outcome of the current standoff could influence not only energy markets but also inflation expectations, central bank policies, and the direction of precious metals in the months ahead.
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