By: Economy Middle east

Gold prices remained largely unchanged on Tuesday as market participants assessed the latest developments in the Middle East conflict alongside shifting interest rate expectations before the release of critical United States inflation data. 

Spot gold experienced a slight decline of 0.1 percent, trading at $4,713.35 per ounce by 8:54 UAE time, following a move to a three-week peak earlier in the trading session. Similarly, U.S. gold futures for delivery in June saw a modest decrease of 0.13 percent, reaching $4,722.44.

In the UAE, gold rates were steady, with 24‑carat gold at AED570.75 and 22‑carat gold at AED528.50. Prices for 21‑carat and 18‑carat gold stood at AED506.75 and AED434.50 respectively, while 14‑carat gold was quoted at AED338.75.

Ceasefire risks and CPI

Expectations for a potential peace agreement regarding Iran diminished after U.S. President Donald Trump described the ceasefire as being “on life support,” noting that Tehran had dismissed a proposal from Washington while maintaining demands that the president characterized as “garbage.”

Analysts are currently focused on the potential impact of the upcoming Consumer Price Index figures, specifically looking for any inflationary pressure that might exceed existing forecasts. This data is scheduled for release later in the day and is expected to provide investors with significant indications regarding the future direction of the Federal Reserve’s monetary policy. 

In related market movements, oil prices climbed by nearly 1 percent, and the dollar continued to build on the gains it achieved during the prior session. Higher costs for crude oil can often drive inflation, which in turn increases the probability of elevated interest rates. While gold is traditionally utilized as a protection against inflation, high interest rates generally create downward pressure on the non-yielding metal.

Banks lower cut forecasts

Reports citing BofA Global Research and Goldman Sachs indicate that both institutions have revised and lowered their expectations for interest rate cuts in the United States for the current year. This shift is attributed to persistent inflation driven by high energy costs and a consistently strengthening labor market. Investors are also closely monitoring the two-day visit to China by the U.S. president this week. During this trip, he is scheduled to meet with Chinese President Xi Jinping to deliberate on a broad range of subjects, including the ongoing situation in the Middle East.

In the broader precious metals market, spot silver recorded a gain of 0.87 percent, reaching $85.98 per ounce. Conversely, platinum saw a decrease of 2.07 percent, falling to $2,109.10, while palladium also trended lower, dropping 1.07 percent to settle at $1,477.00.