Gold pressured by war uncertainty — Eyes on Fed decision

Gold remained largely flat as investors assessed renewed diplomatic efforts to resolve a nearly two-month conflict in the Middle East. Bullion traded around $4,695 an ounce after a 0.6% decline on Monday, with spot prices in Singapore edging to $4,697.49 at one point. Silver and other precious metals posted modest gains amid the cautious tone.

Market attention has focused on reports that the U.S. discussed Iran’s proposal, which would lift the blockade on Iranian ports in exchange for reopening the Strait of Hormuz. White House communications indicated President Donald Trump held national security talks on the proposal. Traders at precious metals houses, including Marc Loeffert of Heraeus, warned that a prolonged closure of the strait prolongs market uncertainty and keeps a risk premium on energy and related assets.

Investors are also monitoring policy calendars: the U.S. Federal Reserve (Fed), European Central Bank (ECB) and other major central banks are due to make or clarify decisions that could affect rate expectations. The supply shock from eight weeks of conflict has elevated inflation concerns, increasing the odds that central banks may keep rates higher for longer — a negative for non-yielding gold. At the same time, central bank purchases and safe-haven flows remain structural supports for bullion.

In the near term, gold is likely to trade with heightened sensitivity to headlines on ceasefire prospects and shipping lane security. A mildly softer dollar provided limited support, but oil and LNG supply updates continue to drive risk-on or risk-off moves across markets. Analysts note that while gold may struggle to find a clear directional trend, episodic spikes tied to geopolitical developments are likely.

Looking ahead, strategists expect that should diplomatic progress reduce the likelihood of a prolonged energy shock, gold could face downward pressure; conversely, any setback that reignites supply fears would likely push prices higher. Ultimately, Fed guidance on the timing and scale of future policy moves will be pivotal in shaping investor positioning and the balance between gold's role as an inflation hedge and its sensitivity to real interest rates.