Gold Falls as Dollar Strengthens and Markets Monitor US-Iran Ceasefire
Gold prices fell on Tuesday (May 12) as investors monitored the fragile US-Iran ceasefire, while awaiting the agenda for this week's meeting between US President Donald Trump and Chinese President Xi Jinping. Spot gold fell 0.8% to US$4,699.16 per ounce at 5:56 a.m. ET, while US gold futures fell 0.5% to US$4,707.20.
Weakness also occurred in other precious metals, indicating broader pressure on the precious metals complex. Spot silver fell 2.6% to US$83.90 per ounce, while platinum fell 2.7% to US$2,078.23, as markets reduced exposure to defensive assets sensitive to changes in the dollar and interest rates.
On the geopolitical front, Trump called Iran's response to a US-backed peace proposal a "piece of garbage" and warned that the ceasefire was at risk of collapsing after weeks of indirect negotiations. Iran declared its readiness to respond to "acts of aggression" and reiterated demands such as the easing of sanctions, the restoration of oil exports, and the recognition of sovereignty over the Strait of Hormuz, a vital route for global oil shipments.
Steadily high oil prices have also limited gold's appeal. This transmission channel is primarily through energy inflation: rising energy costs risk holding inflation in place for longer and reinforcing expectations of high interest rates, which tend to reduce the appeal of non-yielding assets like gold. At the same time, the US dollar has strengthened as it is seen as a relative safe haven amid geopolitical uncertainty, adding pressure on gold, making it more expensive for buyers outside the US.
Market focus has now shifted to two short-term catalysts: the Trump-Xi meeting, which is expected to discuss Iran, Taiwan, trade tensions, AI, and energy security, and the release of US inflation data, particularly the CPI, to gauge the impact of geopolitical tensions on the Federal Reserve's policy direction. The combination of the dollar, oil, and inflation data will be key variables monitored by the gold market in the near term.
Source: Newsmaker.id
