Gold prices declined in the European market on Tuesday, pulling back from the three-week high recorded earlier during Asian trading, and heading toward their first loss in the past three sessions, pressured by correction and profit-taking activity alongside a stronger US dollar and rising global oil prices.

Higher fuel prices are renewing inflationary pressures on Federal Reserve policymakers, reducing the likelihood of near-term US interest rate cuts. Investors are also awaiting the release of key US inflation data for April later today to reassess those expectations.

Price Overview

• Gold prices today: Gold prices fell by more than 1.0% to ($4,687.35) from the session opening level at ($4,735.87), after hitting an intraday high of ($4,773.58), the highest level since April 21.

• At Monday’s settlement, gold prices gained 0.45%, marking a second consecutive daily advance.

US Dollar

The US Dollar Index rose by 0.45% on Tuesday, extending gains for a second straight session and reflecting continued strength in the US currency against a basket of major and minor currencies.

The rise comes amid increased safe-haven demand for the US dollar due to fears of renewed military confrontations between the United States and Iran, especially after Tehran rejected the US peace proposal.

Global Oil Prices

Oil prices in global markets climbed nearly 3% on Tuesday, extending broad gains for a second consecutive day amid fears that the Strait of Hormuz could remain closed, disrupting oil supplies.

Rising oil prices are undoubtedly reviving concerns over accelerating inflation, which could push major central banks toward raising interest rates in the near term, marking a sharp reversal from pre-war expectations of rate cuts or prolonged policy stability.

US-Iran Negotiations

US President Donald Trump said on Monday that the ceasefire with Iran was “close to collapse,” after Tehran’s response to a US proposal aimed at ending the war showed that both sides remain far apart on several key issues.

Trump also confirmed that he is seriously considering relaunching “Project Freedom,” while announcing plans for a major meeting with senior generals and military commanders to discuss available options and strategies regarding the Iranian file.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated that there is no alternative to accepting Iran’s proposal, stressing that Tehran is prepared to respond immediately to any military action.

US Interest Rates

• According to the Federal Reserve’s semiannual report released on Friday, the ongoing war with Iran and its impact on oil prices and supplies topped the list of financial stability concerns.

• Amid rising oil prices, and according to the CME FedWatch Tool, markets increased pricing for the probability of keeping US interest rates unchanged at the June meeting from 95% to 98%, while the probability of a 25-basis-point rate cut fell from 5% to 2%.

• To further reassess those expectations, investors are awaiting the release of key US inflation data for April later today.

• The US Senate is also set to vote today on whether to approve or reject Kevin Warsh’s nomination as Federal Reserve Chair for the term extending from May 2026 to May 2030.

Gold Outlook

Daniel Pavilonis, Senior Market Strategist at RJO Futures, said markets remain heavily focused on expectations surrounding the Strait of Hormuz, particularly the possibility of reopening it, while also increasingly pricing in the broader scenario of rising energy costs.

SPDR Gold Trust

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 2.29 metric tons on Monday for a third consecutive daily gain, bringing total holdings to 1,036.28 metric tons, the highest level since April 30.

The euro declined in European trading on Tuesday against a basket of global currencies, extending its negative movement for a second consecutive session against the US dollar, as investors continued favoring the US currency as the top safe-haven asset amid fading hopes for a US-Iran agreement that could end military tensions in the Middle East.

With global oil prices continuing to rise, markets are increasingly pricing in the possibility of a European interest rate hike in June. Investors are now awaiting additional economic data from the eurozone to reassess those expectations.

Price Overview

• EUR/USD today: The euro fell more than 0.2% against the US dollar to $1.1757, from today’s opening level at $1.1783, while the session high was recorded at $1.1788.

• The euro ended Monday down less than 0.1% against the dollar, due to renewed corrective selling and profit-taking after reaching a three-week high at $1.1797.

• Beyond profit-taking activity, the euro weakened due to fears of renewed war between the United States and Iran.

US Dollar

The US Dollar Index rose 0.25% on Tuesday, extending gains for a second straight session, reflecting continued strength in the US currency against a basket of global currencies.

The rise comes as investors continue buying the US dollar as a safe haven amid growing concerns over renewed military confrontation between the United States and Iran, especially after Tehran rejected the American peace proposal.

US-Iran Negotiations

US President Donald Trump said on Monday that the ceasefire with Iran was “close to collapse,” after Tehran’s response to a US proposal to end the war showed that both sides remain far apart on several key issues.

Trump also confirmed that he is seriously considering relaunching “Project Freedom,” while announcing plans for an upcoming meeting with a large group of generals and military commanders to discuss available options and strategies regarding the Iranian file.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said there is no alternative to accepting Iran’s proposal, stressing that Tehran is prepared to respond immediately to any military action.

Global Oil Prices

Oil prices rose nearly 1% on Tuesday, maintaining gains for a second consecutive day amid fears that the Strait of Hormuz could remain closed and continue disrupting global oil supplies.

Higher global oil prices are undoubtedly reviving fears of accelerating inflation, which could push central banks worldwide toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of prolonged rate cuts or policy stability.

European Interest Rates

• As global oil prices continue rising, money markets raised pricing for a 25-basis-point European Central Bank rate hike in June from 45% to 50%.

• Investors are now awaiting more eurozone data on inflation, unemployment, and wages in order to reassess those expectations.

The Japanese yen weakened in Asian trading on Tuesday against a basket of major and secondary currencies, extending its losses for a second consecutive session against the US dollar, as investors continued favoring the US currency as the top safe-haven asset amid escalating geopolitical tensions between the United States and Iran, especially after Tehran rejected the US peace proposal.

The summary of opinions released by the Bank of Japan earlier today showed a clear hawkish tilt and growing preparation for an early interest rate hike, driven by rising inflation risks stemming from the Middle East crisis and the war involving Iran.

Price Overview

• USD/JPY today: The US dollar rose more than 0.3% against the Japanese yen to ¥157.65, from today’s opening level at ¥157.14, while the session low was recorded at ¥157.08.

• The yen ended Monday down 0.3% against the dollar, as renewed profit-taking and corrective selling emerged after the currency touched a three-month high at ¥155.03.

• Beyond profit-taking activity, the yen weakened due to fears of a renewed war between the United States and Iran.

US Dollar

The US Dollar Index rose 0.25% on Tuesday, extending gains for a second straight session, reflecting continued strength in the US currency against a basket of global currencies.

The rise comes as investors continue buying the US dollar as a safe haven amid growing concerns over renewed military confrontation between the United States and Iran, especially after Tehran rejected the American peace proposal.

US-Iran Negotiations

US President Donald Trump said on Monday that the ceasefire with Iran was “close to collapse,” after Tehran’s response to a US proposal to end the war made it clear that both sides remain far apart on several key issues.

Trump also confirmed that he is seriously considering relaunching “Project Freedom,” while announcing plans for an upcoming meeting with a large group of generals and military commanders to discuss available options and strategies regarding the Iranian الملف.

Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said there is no alternative to accepting Iran’s proposal, stressing that Tehran is prepared to respond immediately to any military action.

Global Oil Prices

Oil prices rose nearly 1% on Tuesday, maintaining gains for a second consecutive day amid fears that the Strait of Hormuz could remain closed and continue disrupting global oil supplies.

Higher global oil prices are undoubtedly reviving fears of accelerating inflation, which could push central banks worldwide toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of prolonged rate cuts or policy stability.

Bank of Japan Summary of Opinions

The Bank of Japan’s Summary of Opinions released today showed a clear hawkish shift and growing readiness for an early rate hike, driven by escalating inflation risks tied to the Middle East crisis and the war involving Iran.

Although the central bank kept interest rates unchanged at 0.75%, internal divisions and the emergence of calls for an immediate hike to 1.0% clearly indicate that Japan’s ultra-loose monetary policy era may be nearing its end.

This shift comes as the BOJ was forced to raise its inflation forecast to 2.8% while lowering economic growth projections, pushing yields on 10-year Japanese government bonds to their highest levels in 29 years.

These developments reflect the depth of the challenge facing the central bank as it attempts to balance imported inflation pressures with the need to protect the economy from recession, leaving global markets closely watching for the anticipated rate hike decision.

Japanese Interest Rates

• As oil prices continue rising, markets increased pricing for a quarter-point interest rate hike by the Bank of Japan at the June meeting from 55% to 60%.

• Investors are now awaiting more Japanese data on inflation, unemployment, and wages in order to reassess those expectations.

Oil prices rose on Monday after US President Donald Trump said the ceasefire agreement with Iran was now “on life support” following his rejection of Tehran’s counterproposal to end the conflict.

US West Texas Intermediate crude futures for June delivery climbed more than 3% to $99.11 per barrel by 1:08 p.m. Eastern Time.

Global benchmark Brent crude futures for July delivery also advanced more than 3% to $104.97 per barrel.

Trump told reporters that the ceasefire agreement was now “incredibly weak,” describing Iran’s proposal to end the conflict as “garbage.”

He added: “I can say the ceasefire is fully on life support, like a doctor walking in and saying: Sir, your loved one has maybe a 1% chance of survival.”

WTI and Brent crude prices have now surged more than 40% since the US- and Israel-led war against Iran began on February 28.

Netanyahu: War with Iran is not over

Meanwhile, Israeli Prime Minister Benjamin Netanyahu warned that the conflict with Iran “is not over yet,” fueling fears of further escalation in the Middle East that could pose an even greater threat to global energy supplies.

Speaking during an interview with CBS’s “60 Minutes,” Netanyahu said: “There are still nuclear materials and enriched uranium that need to be removed from Iran.”

He added: “There are still enrichment sites that need to be dismantled. There are still Iran-backed groups, as well as ballistic missiles they still want to produce... there is still more work to be done.”

When asked how the United States and Israel would remove the nuclear materials, Netanyahu replied: “You go in and take them.”

Citigroup: Oil price risks still tilt to the upside

Analysts at Citigroup said in their latest oil market report that prices could climb even higher if Iran and the United States fail to reach an agreement.

They added that oil markets have so far benefited from supportive factors including elevated inventories, releases from strategic petroleum reserves, weak demand across emerging economies, and intermittent signals suggesting possible de-escalation in the Middle East.

However, the bank stressed that oil price risks remain skewed to the upside, given Iran’s significant control over the timing and conditions of any potential agreement to reopen the Strait of Hormuz, one of the world’s most critical energy corridors.

Citigroup analysts said: “Our base case assumes the Iranian regime reaches an agreement to reopen the strait by the end of May... but we still believe the risks point toward delays and/or only a partial reopening, meaning disruptions could last longer.”

Warnings of “demand destruction” and global crises

Felipe Elink Schuurman, CEO and co-founder of Sparta Commodities, said the COVID-19 pandemic offers a useful comparison for current oil market conditions.

Speaking to CNBC, he explained: “In 2020, we lost an average of 9 million barrels per day in demand compared to 2019, which is roughly equivalent to what we are now losing on the supply side.”

He added: “The market will have to adjust, and we will eventually reach a level of demand destruction.”

He continued: “The question now is where this decline in demand will come from. Unfortunately, the result is that wealthy countries will simply pay more.”

Schuurman noted that crude oil prices may not necessarily reach $200 per barrel, but consumer fuel products could still experience persistently elevated prices.

He concluded: “We may end up in a scenario where poorer countries face a humanitarian crisis, Europe faces an economic crisis, and the United States faces a political crisis.”