Gold prices hold steady as traders watch Trump's Iran deadline

Gold was little changed on Tuesday as traders awaited the outcome of US President Donald Trump's deadline for Iran to reopen the Strait of Hormuz, the critical waterway through which a substantial share of global oil trade passes.

The metal has edged higher in recent sessions as the Iran conflict stoked inflation fears, but rising interest rate expectations are limiting its upside.

Markets watch Trump's Hormuz deadline

Investors were watching closely on Tuesday to see whether Trump would confirm that the Strait of Hormuz had reopened by his 8 p.m. EDT deadline.

Iran has said it wants a lasting ceasefire with the US and Israel but has refused Western pressure to reopen the shipping passage, state television reported on Sunday.

Trump has separately warned Tehran that failure to agree a nuclear deal before a 30 April deadline could result in severe consequences, including the possibility of Iran being "taken out."

Oil climbed towards a two-month high above $115 a barrel on Tuesday as an escalating war of words kept markets in risk-off mode.

Inflation concerns and Fed outlook shape trading

The surge in oil prices has reignited inflation fears, lending support to gold in its role as an inflation hedge.

However, the same price pressures are prompting Federal Reserve officials to lean hawkish, which tempers gold's appeal by raising the opportunity cost of holding a non-yielding asset.

Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee have both said they now view inflation as a greater concern than unemployment, Reuters reported.

Fed futures showed on Friday that markets are not pricing in any US interest rate cuts this year.

Attention this week will turn to the minutes of the Federal Reserve's most recent meeting, due on Wednesday, as well as key inflation readings including the Personal Consumption Expenditures index and the Consumer Price Index — data that will materially shape rate expectations for the remainder of the year.

Analyst view and precious metals moves

Gold could end the year in a range of $5,500 to $6,000 an ounce if it reverts to its recent pattern of trading as an independent speculative narrative decoupled from other asset classes, according to Ilya Spivak, head of global macro at financial services firm Tastylive.

"Last year, gold went off on its own and became its own speculative narrative," Spivak said. "It could go in that direction again as other markets are down."

Gold was little changed, edging down about 0.1% to around $4,640 an ounce, while silver also eased slightly.

Platinum and palladium also weakened, weighing on broader precious metals sentiment.

What to watch

Gold's near-term direction will hinge on two overlapping variables: developments in the Washington-Tehran standoff and any signal on when the Hormuz corridor might reopen; and the Federal Reserve minutes and inflation data due this week, which will crystallise market thinking on the pace and timing of rate moves.

A de-escalation in the Iran conflict that eases oil prices could paradoxically weigh on gold by reducing inflation anxiety, even as it lifts broader risk appetite.