Gold Prices fall as stronger dollar and oil weigh ahead of U.S. inflation data

Gold fell from a three-week high reached earlier on Tuesday, as fading hopes of a U.S.-Iran peace deal pushed the dollar and oil prices higher, clouding the U.S. interest rate outlook ahead of key inflation data. Spot gold dropped 0.8% to $4,698.22 per ounce by 0913 GMT, after climbing to its highest level since April 21 earlier in the session. U.S. gold futures for June delivery fell 0.5% to $4,706.10. U.S. President Donald Trump said a ceasefire with Iran was “on life support” after Tehran rejected a U.S. proposal to end the conflict and maintained a list of demands that Trump described as “garbage.” “The overall driver for gold’s decline is rising energy prices, which are once again lifting U.S. bond yields ahead of today’s CPI (consumer price index) data, as well as a stronger dollar,” said Ole Hansen, head of commodity strategy at Saxo Bank. Oil prices rose as the key Strait of Hormuz remained largely closed. The April inflation data, due later in the day, could provide clues on the Federal Reserve’s monetary policy direction. Higher crude oil prices can fuel inflation, increasing the likelihood of elevated interest rates. While gold is seen as a hedge against inflation, higher rates typically weigh on the non-yielding asset. Benchmark 10-year U.S. Treasury yields hit a one-week high, while the dollar rose 0.4%, making dollar-denominated commodities more expensive for holders of other currencies. Traders have largely priced out a Federal Reserve rate cut this year, with markets now assigning a 36% chance of a rate hike by March 2027, according to CME Group’s FedWatch tool. Markets are also watching Trump’s two-day visit to China starting Wednesday, during which he is expected to meet Chinese President Xi Jinping, with the Middle East likely to feature prominently on the agenda. “Overall, gold remains range-bound, with support established near $4,500 and resistance at the 50-day moving average, around $4,757,” Hansen said. Spot silver fell 2.4% to $84.05 per ounce, platinum dropped 3.1% to $2,066.15, and palladium declined 1.6% to $1,484.23.