Gold climbs off more than one-month low; Middle East risks linger

Gold prices rose on Tuesday after hitting a more than one-month low in the previous session, as investors assessed a fragile Middle East truce and the conflict’s potential impact on inflation and interest-rate expectations. Spot gold was up 1% to $4,566.79 per ounce at 8:45 a.m. EDT (1245 GMT), after touching its lowest level since March 31 on Monday. U.S. gold futures gained 1% to $4,577.60. "We are seeing some bargain hunting after the recent selloff, and oil prices easing are also providing support. The market is going to continue to watch the headlines, but we could see focus shift a little towards economic data," said Jim Wyckoff, market analyst at American Gold Exchange. "Gold bulls need a significant fundamental spark to regain their footing," he added. A truce in the Middle East was under strain after the U.S. and Iran exchanged fire in the Gulf as they wrestled for control of the Strait of Hormuz. The narrow waterway, which carries a large share of global oil, fertiliser and other commodity supplies, has been virtually closed since attacks began on February 28, driving up prices around the world. Oil prices slipped on Tuesday, although exchanges of fire limited losses. Elevated energy prices risk stoking inflation and delaying central banks’ easing cycles. While gold is traditionally seen as a hedge against inflation and uncertainty, its appeal tends to wane when interest rates are high, as rising yields make non-yielding assets less attractive. Safe-haven demand remains, even if its influence has weakened as gold is increasingly treated as a risk-sensitive asset, said Fawad Razaqzada, market analyst at City Index. "Nonetheless, the need to hedge against inflation, alongside persistent central bank buying, has helped limit deeper downside moves so far," Razaqzada said. The head of the International Monetary Fund on Monday warned the global economy could face a "much worse outcome" if the Middle East war drags into 2027 and oil prices hit around $125 per barrel. U.S. data due this week include job openings figures, the ADP employment report, and the April payrolls report. Spot silver firmed 1.1% to $73.53, platinum gained 2% to $1,984.55, and palladium rose 2.4% to $1,515.05.