Spot gold prices fell by 0.6% to $4,544.33 per ounce as of 0049 GMT, while U.S. gold futures for June delivery rose by 0.5% to $4,545.60. The decline in gold prices comes amid escalating tensions between the U.S. and Iran, which have also driven up Brent crude futures by nearly 2% in early Asian trade on Tuesday.
Elevated crude oil prices are likely to fuel inflation and keep interest rates higher for longer, impacting gold, a non-yielding asset traditionally seen as a hedge against inflation.
Markets are currently pricing in a 54% chance of a U.S. Federal Reserve rate hike by December, according to CME Group's FedWatch tool.
Meanwhile, Ghana's government is set to renew the mining lease for Gold Fields' Tarkwa mine, subjecting the South African miner to fresh scrutiny before granting renewal.
Spot silver also fell by 0.8% to $77.42 per ounce, platinum lost 0.5% to $1,958.18, and palladium slid 0.6% to $1,389.68.
Background
The ongoing geopolitical tensions and their impact on commodity prices highlight the interconnectedness of global markets.
Investors should keep an eye on further developments in U.S.-Iran relations and their potential impact on inflation and interest rates.
