Gold price extends drop amid US-Iran uncertainty

Gold prices extended declines on Tuesday, as investors remained cautious over United States-Iran negotiations to end the near-two-month war that has intensified global inflation concerns.

Spot gold fell more than 1% to trade at around $4,763 an ounce — its lowest in over a week. U.S. gold futures saw a slightly lower decline of 0.6%, trading at near $4,800 in New York.

The move came amid inconsistent messaging surrounding ongoing peace talks between the U.S. and Iran. Earlier, President Donald Trump said that an extension of the two-week ceasefire is unlikely, and later threatened to resume attacks should a deal not materialize, but in a morning interview with CNBC, he also said that “a great deal” is still expected to be signed.

Since the Middle East war kicked off at the end of February, bullion has fallen by about 10% as the closure of the Strait of Hormuz disrupted flows of the global energy supply. This reduced expectations of monetary easing by central banks, causing headwinds for assets like gold that thrive in a low-interest environment.

In recent weeks, however, the yellow metal has been showing signs of recovery as the sides started talks to end the war, though gold investors remain on edge for the time being until a resolution is reached.

Gold is expected to remain volatile but structurally supported, with central bank demand and geopolitical risk helping to establish a price floor above recent correction lows, S&P Global analysts said in a recent post.