Gold Prices Slip as Stronger U.S. Dollar Offsets Safe-Haven Demand
Gold prices moved lower on Tuesday as a sharply stronger U.S. dollar pressured the precious metal, even as investors continued to monitor the escalating Middle East conflict and rising oil supply concerns.
At 09:01 ET (14:01 GMT), spot gold fell 3% to $5,161.95 per ounce, after earlier climbing as much as 1% to an intraday high of $5,380.08. U.S. gold futures declined 2.7% to $5,167.94 per ounce. The yellow metal had posted a 1% gain in the previous session.
Gold Supported by Geopolitical Tensions
Gold, traditionally viewed as a safe-haven asset during periods of geopolitical instability, initially found support following intense military developments in the Middle East over the weekend.
However, the same geopolitical tensions also strengthened the U.S. dollar, limiting gold’s upside. A firmer dollar makes gold more expensive for foreign buyers and often triggers short-term profit taking, which weighed on prices during Tuesday’s session.
Large-scale military strikes by U.S. and Israeli forces targeted Iran, resulting in the death of Supreme Leader Ali Khamenei and several senior commanders. Tehran responded with missile attacks across the region, escalating fears of a broader conflict.
The violence has extended beyond Iran’s borders. Israeli strikes reportedly hit Lebanon after attacks by Hezbollah, while Kuwaiti air defenses mistakenly shot down U.S. jets in a separate incident, intensifying regional instability.
U.S. President Donald Trump stated that military operations could continue for weeks and acknowledged uncertainty within Iran’s leadership following Khamenei’s death. His remarks reinforced concerns about prolonged geopolitical risk.
Meanwhile, Iran has threatened to target vessels passing through the Strait of Hormuz, a critical chokepoint for global oil shipments. Any disruption in this vital trade route could significantly impact energy markets and further boost safe-haven demand for gold.
Max Baecker, President of AHG, told Investing.com that if tensions escalate or energy infrastructure faces sustained threats, gold could quickly approach $5,450. However, if conditions stabilize, consolidation toward the $5,250–$5,300 range would be a normal market reaction, particularly if real yields remain firm.
He added that gold had already been advancing within a supportive macroeconomic environment prior to the recent conflict. Expanding sovereign debt, continued central bank purchases, and gradual de-dollarization trends were already underpinning the rally, with geopolitical risks accelerating those existing dynamics.
Silver and Platinum Retreat Sharply
Other precious metals reversed earlier gains and declined significantly. Spot silver dropped 8% to $82.2315 per ounce, while platinum fell 8.6% to $2,117.60 per ounce.
Analysts at ING noted that silver tends to exhibit higher volatility compared to gold. Lighter liquidity and speculative positioning can amplify intraday price swings, while gold remains relatively more stable due to its status as the preferred hedge in risk-off environments.
Industrial metals also weakened. Benchmark copper futures on the London Metal Exchange declined 1.8% to $13,108.00 per ton, while U.S. copper futures slipped 1.8% to $5.8418 per pound.
