Gold Holds Near $4,650 As Geopolitical Risks Persist

Gold prices stabilised around $4,650 per ounce on Tuesday, following two consecutive sessions of decline, as global investors reassessed escalating geopolitical tensions linked to renewed threats from Donald Trump toward Iran.

The precious metal’s movement reflects cautious sentiment in financial markets, with participants weighing the implications of potential military escalation in the Middle East.

Trump reportedly warned of possible strikes on Iranian civilian infrastructure, including power plants and bridges, should his demands—such as the reopening of the Strait of Hormuz—not be met within a specified deadline.

Silver prices showed little volatility, hovering slightly above $73 per ounce, as investors maintained a wait-and-see approach amid uncertainty.

Currency markets mirrored the cautious mood. The US dollar, after early gains, weakened ahead of the North American trading session, declining against both G10 and emerging market currencies.

The shift suggests a modest retreat from safe-haven positioning, even as risks remain elevated.

In commodities, US equity index futures pointed higher, signalling tentative optimism among investors. Meanwhile, May contracts for West Texas Intermediate crude slipped by about one per cent, though prices remained elevated near $110 per barrel.

Analysts describe the current market outlook as highly binary. Any breakdown in diplomatic efforts could trigger a sharp risk-off sentiment, particularly if tensions between the United States and Iran escalate further. Conversely, progress toward de-escalation could support a recovery in risk assets.

Notably, Trump’s warning appeared to overshadow emerging indications that Washington and Tehran may be inching toward a ceasefire arrangement through third-party mediation.

Despite its traditional role as a safe-haven asset, gold has declined roughly 15 per cent since the onset of the conflict. The drop reflects the complex interplay between geopolitical risk and macroeconomic factors, particularly the surge in energy prices driven by the crisis. Elevated oil prices have heightened global inflation concerns, complicating the policy outlook for central banks.

Expectations around monetary policy have shifted markedly. Investors now anticipate that the Federal Reserve will likely maintain interest rates at current levels through the remainder of the year. This marks a significant departure from earlier forecasts that had priced in at least two rate cuts.

The evolving geopolitical landscape, coupled with persistent inflationary pressures, continues to shape market direction, leaving investors navigating a delicate balance between risk and opportunity.