Gold Prices Dip Amid Middle East Uncertainty and Inflation Fears

Gold prices edged lower during Asian trading on Thursday, retreating after modest gains in the previous session as investors continued monitoring escalating Middle East tensions threatening a fragile ceasefire between the United States and Iran.

Spot gold declined 0.3% to $4,704.96 per ounce, while U.S. Gold Futures dropped 1% to $4,731.84 per ounce. The previous session saw bullion briefly surge as much as 3% before settling just 0.3% higher, following news of a Pakistan-brokered two-week truce designed to halt hostilities and reopen the strategically vital Strait of Hormuz.

Despite the temporary agreement, market confidence remained shaky. Continued Israeli military strikes on Lebanon cast serious doubt over the truce's durability, while Iranian officials stated that ongoing attacks made peace negotiations "unreasonable" under current conditions. Tehran warned that persistent military activity undermines trust and could derail diplomatic efforts altogether, highlighting deep divisions over how the ceasefire framework would be enforced.

Meanwhile, oil prices staged a modest recovery Thursday after tumbling sharply when the ceasefire was first announced. Since gold is traditionally considered a safe-haven asset, rising oil prices have added pressure by amplifying global inflation concerns, which reduces gold's relative appeal to investors seeking stability.

Attention is now turning to the U.S. March Consumer Price Index report due Friday. Analysts expect the data to reflect energy-driven price pressures still filtering through the broader economy following the recent oil shock. The figures are expected to offer clearer direction on the Federal Reserve's next monetary policy move, with markets anticipating a notable uptick in inflation.

The U.S. dollar steadied after a 0.7% decline in the prior session, limiting further upside for gold. Other precious metals also saw losses, with silver falling 1.3% to $73.16 per ounce and platinum slipping 0.9% to $2,011.14 per ounce.