Gold prices stabilized during Asian trading on Tuesday, recovering after a sharp decline in the preceding session. This stability follows conflicting developments from the Israel-Iran conflict and expectations surrounding the Federal Reserve, creating a volatile atmosphere for precious metal investors.

At 01:12 ET (05:12 GMT), spot gold increased by 0.2% to $3,392.25 an ounce, while August gold futures fell 0.2% to $3,410.70/oz.

Market Reactions to U.S. Involvement in Israel-Iran Conflict

Gold surged past $3,450 earlier but retreated as reports indicated that Iran was advocating for a ceasefire. Risk appetite increased momentarily, which reduced demand for safe-haven assets.

However, Tehran’s denial of any ceasefire initiatives alongside ongoing Israeli strikes reignited market anxiety. President Trump’s warning urging evacuation from Tehran heightened fears of broader conflict. While the U.S. has stated it will not engage directly, ongoing diplomatic efforts for a ceasefire are reportedly in motion.

Analyst Predictions: Gold Prices Might Drop

Despite current support driven by volatility, analysts at Citi foresee a potential decline in gold prices below $3,000/oz in upcoming quarters, attributing this to diminishing investor appetite and overextended rallies.

Fed Decision Poses Market Risks

The forthcoming Federal Reserve rate decision on Wednesday remains a key influence for metals markets. No rate alterations are expected, but the market will scrutinize Chair Powell’s comments for hints on future policy, particularly in light of soft inflation and modest growth trends.

Current investor sentiment leans toward bullishness on the dollar, placing additional pressure on metals like gold, despite a slightly weaker currency.

Mixed Trends in Other Metals

• Platinum futures fell 0.1% to $1,239.90/oz

• Silver futures rose 0.2% to $36.503/oz

• London copper decreased by 0.4% to $9,674.75 a ton

• U.S. copper futures remained unchanged at $4.8163 a pound

A majority of base metals remained muted as uncertainty and cautious trading overshadowed the market ahead of the Fed’s anticipated statement.

For monitoring daily price movements and historical trends in precious metals, investors can refer to key market insights and analytics.