Gold Slides as Dollar Strength and Rate Concerns Offset Geopolitical Support

Gold prices declined in Asian trading on Thursday, as investors navigated mixed signals surrounding the Iran conflict while a firmer U.S. dollar reduced the metal’s appeal. The pullback highlights the ongoing tension between geopolitical demand for safe-haven assets and macroeconomic pressures tied to interest rates.

Spot gold fell 1.1% to $4,457.06 per ounce as of 03:00 ET (07:00 GMT), while U.S. gold futures dropped 2.2% to $4,485.10. The decline follows a recent rebound that had pushed bullion back above the $4,500 level earlier in the week.

That earlier recovery was supported by a softer dollar and cautious optimism over diplomatic efforts between Washington and Tehran. However, gains proved limited as uncertainty around the conflict persisted.

Iran is currently reviewing a U.S.-backed proposal aimed at ending hostilities, but the outlook remains unclear. While Tehran has not rejected the plan outright, it has also denied engaging in direct negotiations, signaling that key differences remain unresolved. This ambiguity has kept markets on edge and contributed to continued volatility across commodities.

Despite gold’s traditional role as a hedge during geopolitical turmoil, recent price action has been unusually unstable. Earlier this month, prices declined sharply even as tensions escalated, reflecting the growing influence of macroeconomic factors—particularly expectations that interest rates will remain higher for longer.

A stronger U.S. dollar has also weighed on bullion, making it more expensive for holders of other currencies. The U.S. Dollar Index remained broadly steady after posting gains over the previous two sessions, maintaining pressure on gold prices.

In addition, fluctuations in oil markets have influenced sentiment. Rising crude prices have fueled inflation concerns, increasing the likelihood that central banks will keep monetary policy tight. This dynamic typically undermines non-yielding assets such as gold, which struggle to compete with interest-bearing instruments in a high-rate environment.

Other precious metals also moved lower, with silver falling 1.8% to $69.97 per ounce and platinum declining 1.8% to $1,897.60 per ounce.

In base metals, benchmark copper futures on the London Metal Exchange dropped 1.3% to $12,177.0 per ton, while U.S. copper futures slipped 0.5% to $5.49 per pound.

Overall, gold remains caught between geopolitical uncertainty and macroeconomic headwinds, with traders closely monitoring both diplomatic developments and interest rate expectations for clearer direction.