Key Highlights
- Gold futures declined 0.4% to settle at $4,666.70 per troy ounce amid geopolitical uncertainty
- President Trump issued an ultimatum to Iran with an 8 p.m. ET Tuesday deadline to reopen Strait of Hormuz
- Approximately 20% of the world’s oil supply flows through the strategically vital waterway
- People’s Bank of China extended its gold buying streak to 17 consecutive months, reaching 74.38 million troy ounces
- Dollar index stands at 100.03, gaining approximately 0.8% over the last month and weighing on precious metals
Precious metal markets displayed divergent behavior on Tuesday as multiple contracts moved in opposing directions. New York futures contracts decreased 0.4% to reach $4,666.70 per troy ounce, whereas spot gold advanced 0.8% to $4,685.54 per ounce during early trading hours. Meanwhile, June delivery gold futures climbed 0.6% to $4,710.84 per ounce.
The fragmented price action reflects market participants’ focus on President Donald Trump’s ultimatum directed at Iran regarding the Strait of Hormuz. The deadline requires Iran to accept a negotiated settlement by 8 p.m. Eastern Time Tuesday or risk American military action targeting its energy sector.
The president declared his intention to eliminate “every bridge” and “power plant” throughout Iran should the deadline expire without an agreement. Trump further cautioned that reconstruction could require “100 years” if the United States proceeds with additional strikes.
The Strait of Hormuz represents a critical chokepoint for global energy markets. Roughly 20% of worldwide oil shipments traverse this narrow passage along Iran’s southern coastline.
Tehran has outlined demands for a comprehensive agreement encompassing sanctions removal, security assurances, and financial restitution for losses incurred. Intelligence suggests the current administration is improbable to accommodate these conditions.
Despite the harsh rhetoric, Trump indicated that diplomatic channels remain open, noting that peaceful resolution of the confrontation remains achievable. The conflict escalated following coordinated American and Israeli military operations against Iran in late February.
Energy Markets and Currency Strength Weigh on Gold
Brent crude maintained levels above $110 per barrel as the ultimatum deadline neared. Elevated oil prices fuel inflation concerns, potentially compelling monetary authorities to maintain restrictive interest rate policies for extended periods.
This dynamic carries significance for gold valuations. Since the precious metal generates no yield, it becomes less attractive when interest rates are anticipated to remain elevated. ANZ analysts noted that Trump’s threatening statements “impacted risk appetite” while boosting the U.S. dollar alongside Treasury yields.
The U.S. dollar index registered 100.03, despite experiencing a 0.2% decline on Tuesday. Throughout the past month, the greenback has appreciated roughly 0.8%. During this identical timeframe, spot gold has surrendered more than 8% of its value.
Dollar appreciation increases gold’s cost for international buyers utilizing alternative currencies, potentially dampening global demand.
Chinese Central Bank Maintains Accumulation Pattern
One bullish factor supporting gold originated from China. The People’s Bank of China expanded its gold reserves for a 17th consecutive month. Official holdings climbed to 74.38 million fine troy ounces by March’s conclusion, rising from 74.22 million in February.
Persistent central bank acquisitions provide a reliable foundation of demand for the precious metal.
As Tuesday morning progressed, financial markets remained tense while awaiting the 8 p.m. ET deadline and any forthcoming Iranian response.
