Global Markets Remain Volatile Amid Middle East Conflict

The price of gold remained relatively stable following a modest two-day gain, as investors assessed the ongoing deadlock in the Middle East conflict and shifts in Asian stock markets ahead of a crucial US inflation report. Gold for immediate delivery traded near $4,726 an ounce, with prices paring earlier gains.

The conflict in the Middle East continues to weigh on investor sentiment, with President Donald Trump on Monday criticizing Iran's response to a US peace proposal. Trump stated that the fragile ceasefire in the Strait of Hormuz was on "massive life support," offering no quick resolution to the conflict. In equity markets, South Korean shares, which have led gains in the region recently, fell by more than 5% before recovering some ground. The drop came after a local policymaker suggested that the nation should pay citizens a "dividend" using taxes on AI profits, before clarifying the remarks.

Gold has had a volatile year, hitting a record in late January before retracing some gains. The precious metal has struggled since the outbreak of the war in the Middle East, as elevated oil prices have fueled concerns that central banks may maintain rates or even raise them to contain the inflationary fallout. This stands to be a headwind for gold, as it does not pay interest.

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Silver was little changed, following a surge of more than 7% on Monday after a report on a liquidity crisis for a state-owned oil firm in Peru. Peru is one of the biggest silver producers. Trump's comments on Iran came ahead of a key US inflation report on Tuesday, with economists expecting a sharp rise in the consumer price index as the Middle East conflict triggers price surges that are rippling through manufacturing and farming.

Spot gold slipped 0.2% to $4,726.09 an ounce at 12:37 p.m. in Singapore, while silver rose 0.2% to $86.25. Platinum and palladium fell. The Bloomberg Dollar Spot Index was 0.2% higher.