Gold prices dip as fresh US-Iran strikes drive up dollar, oil

Investing.com-- Gold prices fell in Asian trade on Tuesday after fresh U.S. strikes on Iran dampened recent optimism over a potential peace deal between the two sides.

The dollar steadied, while oil prices rebounded on Tuesday following news of the U.S. attacks, pressuring gold prices and cutting short a recent rally in bullion.

Spot gold fell 0.9% to $4,529.07 an ounce by 01:46 ET (05:46 GMT), while gold futures steadied at $4,560.92/oz.

Other precious metals also retreated, with spot silver down 2.1% to $76.4330/oz, while spot platinum fell 0.7% to $1,951.33/oz.

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Gold falls after US-Iran strikes boost oil, dollar

Gold and precious metals had gained some ground in recent sessions, especially after several reports showed the U.S. and Iran were close to a framework deal to reopen the Strait of Hormuz.

But reports on Monday evening showed the U.S. had carried out fresh military strikes against Iran, denting the prospect of a peace deal between the two countries.

U.S. media reported the military struck missile launch sites and mine-laying boats in southern Iran, with Central Command presenting the attacks as "self defence."

CENTCOM also claimed that the U.S.-Iran ceasefire remained in place. Separately, Iranian officials warned that any new attacks on the country’s military will be met with retaliation.

Casting more doubts over a U.S.-Iran peace deal, U.S. Secretary of State Marco Rubio said a deal will "take a few days," and warned that Hormuz will reopen "one way or another."

Monday’s development helped the dollar steady from recent losses, and also saw oil prices rebound from a week of declines.

The rebound in oil left markets fretting over the inflationary impact of the Iran war. Fears that energy-driven inflation will spur more hawkish global central banks were a major weight on gold prices this year.

Markets are now pricing in a 40% chance the Federal Reserve will hike interest rates by 25 basis points by the end of the year-- a move that bodes poorly for gold.

Higher rates pressure gold by increasing the opportunity cost of investing in non-yielding assets.

Beyond the Fed, other major central banks have also signaled potential rate hikes to counter the inflationary impact of the Iran war.