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Gold prices steadied in Asian trade on Tuesday, after retreating in the prior session amid growing uncertainty over U.S. involvement in the Israel-Iran conflict and the potential for a ceasefire.
Spot gold rose 0.2% to $3,392.25 per ounce, while gold futures for August dropped 0.2% to $3,410.70 per ounce by 01:12 ET (05:12 GMT). Gold had reversed much of its recent gains on Monday after reports that Iran was seeking a ceasefire, which spurred some risk-on sentiment. However, tensions quickly escalated when Tehran rejected the truce offer, and a warning from U.S. President Donald Trump raised concerns about an imminent escalation.
Israel-Iran Conflict and U.S. Involvement
The uncertainty surrounding the Israel-Iran conflict increased on Monday evening when President Trump warned that “everyone should immediately evacuate Tehran,” further fueling fears of an escalation in the war. However, the White House later clarified that the U.S. would not directly participate in the conflict, although Trump continued his strong rhetoric against Iran’s nuclear ambitions.
A report from Axios revealed that Washington is still seeking dialogue with Tehran after the cancellation of nuclear talks that were scheduled over the weekend. Both U.S. and Iranian officials are reportedly looking to arrange talks on a potential ceasefire and the nuclear deal later this week, though no clear date has been set.
Gold’s Momentum Slows Amid Mixed Reports
Reports surrounding the conflict, which was triggered by Israeli strikes on Iranian nuclear facilities last week, have caused gold’s momentum to falter. After briefly rising past $3,450 per ounce on Monday, gold sharply reversed course as news of a potential ceasefire dampened the market’s risk-off sentiment.
Citi’s Warning on Gold Price Outlook
Citi analysts cautioned that gold prices could fall back below $3,000 per ounce in the coming quarters, as the record-setting rally in bullion shows signs of running out of steam. Investor demand for gold is expected to cool, which could further weigh on the metal’s price in the future.
Fed Meeting and Broader Metal Market Impact
Broader metal prices saw a decline on Tuesday as market participants awaited the Federal Reserve’s rate decision this week, which also limited appetite for precious metals.
- Platinum futures fell 0.1% to $1,239.90 per ounce, pulling back after a strong rally over the past month.
- Silver futures gained 0.2%, rising to $36.503 per ounce.
In the industrial metals sector, benchmark copper futures on the London Metal Exchange fell 0.4% to $9,674.75 per ton, while U.S. copper futures held steady at $4.8163 per pound.
Dollar Influence and Fed Expectations
The broader metal markets saw limited support from a softer dollar, as traders remained focused on the greenback ahead of the Fed meeting. The central bank is widely expected to keep interest rates unchanged on Wednesday, but investors will be closely watching Federal Reserve Chair Jerome Powell’s comments for guidance on the future direction of rates, particularly amid concerns over inflation and economic growth.
Conclusion
Gold prices are experiencing some stability amid a volatile geopolitical backdrop, with U.S. involvement in the Israel-Iran conflict remaining a key concern for investors. While gold has lost some momentum due to mixed reports surrounding the conflict and a potential ceasefire, it continues to be supported by risk-off sentiment. However, Citi’s outlook and the upcoming Fed meeting are likely to influence market sentiment, with expectations that demand for gold may cool in the near term.
