Spot Gold held mostly steady on Tuesday, but remained under pressure by a firmer US Dollar amid uncertainty over a Middle East peace truce. Yet, ceasefire hopes seemed offset by risks of further escalation.
A firmer dollar makes dollar-priced Gold less appealing to international investors holding other currencies.
US President Donald Trump said the ceasefire proposal was “not good enough”, while his deadline for Iran to reopen the Strait of Hormuz drew close. Trump warned that Iranian power plants and bridges could be targeted unless his conditions are met by 8 p.m. Eastern Time. This has bolstered safe-haven demand for the greenback.
Crude oil prices rose for a third straight session, while holding above $110 per barrel, keeping inflation concerns alive and reinforcing the case for tighter central bank monetary policy.
Traders are no longer expecting two rate cuts by the Federal Reserve this year. Instead, expectations of a potential rate hike have risen, which may keep the US Dollar underpinned and weigh on Gold.
Higher interest rates tend to increase the opportunity cost of holding Gold, which pays no interest.
Gold was last down 0.10% on the day to trade at $4,645.26 per troy ounce.
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