Gold declines for the third consecutive day, as Trump's deadline for Iran heightens inflation concerns.

Investing.com- During Tuesday’s Asian trading session, gold prices fell for the third consecutive trading day, as investors weighed inflation and interest-rate concerns ahead of the U.S. president Donald Trump’s final deadline for Iran.

As of 22:13 (U.S. Eastern Time) (02:13 Beijing Time), spot gold was down 0.5% to $4,627.91 per ounce, while U.S. gold futures fell 0.7% to $4,652.20.

The Monday delivery price dropped 0.6% after choppy trading.

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Trump’s threat to Iran sparks inflation concerns

Despite rising geopolitical risks, gold prices still fell. Trump warned that if Iran failed to reopen the Strait of Hormuz before its self-set Tuesday 8:00 p.m. Eastern Time deadline, the country could be “wiped out,” raising the possibility of a broader conflict in the Middle East.

This standoff has already disrupted global energy flows, driving up oil prices, worsening inflation concerns, and complicating the outlook for monetary policy.

In normal circumstances, geopolitical uncertainty would support gold, but gold is instead under pressure, because higher oil prices raise inflation expectations, thereby weakening the outlook for the Fed to cut rates soon.

Higher interest rates reduce the appeal of non-yielding assets such as gold, while a stronger dollar also weighs on gold prices.

Iran rejects the U.S. ceasefire proposal

Diplomatic efforts to resolve the conflict have made little progress. Iran rejected a U.S.-backed 45-day ceasefire and a proposal to reopen the strait in phases.

Iran instead called for a permanent solution, including lifting sanctions, providing security guarantees, and compensating for losses.

The lack of breakthrough progress has heightened uncertainty in financial markets, and investors are currently closely monitoring developments around Trump’s final deadline.

Investors are also awaiting key U.S. inflation data scheduled for Friday, which is expected to provide clues about the Fed’s path for interest rates.

In other precious metals, silver fell 1.2% to $71.94 per ounce, and platinum dropped 1.4% to $1,956.60.

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