Gold prices fell Tuesday as a surging U.S. dollar outweighed safe-haven buying fueled by escalating U.S.-Israeli military action against Iran.
Spot gold declined 1.4% to $5,252.05 an ounce, while U.S. futures dropped 0.9% to $5,263.80 in morning trading.
The dollar climbed to a one-month high, making dollar-denominated commodities more expensive for overseas buyers and pressuring bullion.
Analysts said markets are increasingly focused on rising inflation risks tied to Middle East tensions, lifting interest rate expectations and supporting the greenback.
Gold, a non-yielding asset, typically benefits from lower rates. Traders now see higher odds the Federal Reserve will hold rates through June.
Oil and gas shipping costs surged after Iran’s Revolutionary Guards reportedly closed the Strait of Hormuz, intensifying inflation fears.
Israeli Prime Minister Benjamin Netanyahu warned the conflict could last “some time,” though analysts remain bullish, with some forecasting gold above $5,600 absent de-escalation.
Other precious metals tumbled, with silver down 6.5%, platinum falling 7.5%, and palladium retreating 4.1% amid heightened market volatility.
