Gold Prices Weaken as Easing US-Iran Tensions Reduce Oil Price Pressure and Heighten Inflation Concerns

Gold Prices Fall Amid Fresh U.S. Attacks in Iran and Rising Oil Prices

May 26 - Gold prices declined on Tuesday as fresh U.S. attacks in Iran pushed oil prices higher, fueling concerns around inflation and higher-for-longer interest rates. The tensions between the U.S. and Iran persisted, causing Brent crude futures to rise nearly 2% in early Asian trade.

Spot gold prices fell 0.6% to $4,544.33 per ounce as of 0049 GMT, while U.S. gold futures for June delivery gained 0.5% to $4,545.60. The elevated crude oil prices can fuel inflation and keep interest rates higher for longer. While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.

The U.S. Federal Reserve is expected to raise interest rates before year-end, with a 54% chance of a move by December, according to CME Group's FedWatch tool. This has further fueled concerns around inflation and higher interest rates.

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In other precious metals, spot silver fell 0.8% to $77.42 per ounce, platinum lost 0.5% to $1,958.18, and palladium slid 0.6% to $1,389.68.

The Ghanaian government has committed to renewing the mining lease for Gold Fields' Tarkwa mine, but will subject the South African miner to fresh scrutiny of its plans before any renewal is granted. Meanwhile, talks between Iran's top negotiator, its foreign minister, and Qatar's prime minister on a potential deal with the U.S. to end the three-month-old war are ongoing, but have yet to yield any breakthrough.