Gold Prices Drop for Third Consecutive Session Amid Iran Tensions and Inflation Fears

Gold prices continued their downward trend in Asian trading on Tuesday, marking a third straight session of losses as markets grappled with mounting inflation concerns and escalating geopolitical tensions tied to U.S. President Donald Trump's ultimatum to Iran.

Spot gold slid 0.5% to $4,627.91 per ounce, while U.S. gold futures declined 0.7% to $4,652.20. This followed a 0.6% drop on Monday after a turbulent trading session.

The losses came despite a heightened risk environment after Trump warned that Iran could face severe consequences if it failed to reopen the Strait of Hormuz by his Tuesday 8 p.m. ET deadline. The standoff has already disrupted global energy supplies, driving oil prices higher and stoking inflation fears that are now weighing heavily on bullion demand.

While gold typically benefits from geopolitical uncertainty, rising oil prices are complicating the picture. Higher energy costs are fueling inflation expectations, which reduce the likelihood of near-term Federal Reserve rate cuts. Since gold yields no interest, it becomes less attractive when rates remain elevated. A strengthening U.S. dollar has further pressured prices.

On the diplomatic front, Iran rejected a U.S.-backed proposal for a 45-day ceasefire and partial reopening of the strait. Tehran is instead pushing for a comprehensive deal that includes sanctions relief, security guarantees, and financial compensation — demands that leave little room for quick resolution.

With negotiations stalled, market uncertainty remains elevated. Investors are now closely watching Trump's deadline and awaiting key U.S. inflation data due Friday, which could offer fresh signals on the Fed's monetary policy direction.

Other precious metals also declined, with silver falling 1.2% to $71.94 per ounce and platinum dropping 1.4% to $1,956.60 per ounce.