Gold rebounds as traders watch Trump’s Iran deadline

Finance

Gold rebounds as traders watch Trumps Iran deadline

Gold price (XAU/USD) recovers to near $4,660 during the early Asian session on Tuesday. The precious metal drifts higher as traders watch US President Donald Trumps Tuesday deadline for military strikes on Iranian infrastructure following the closure of the Strait of Hormuz.

Trump said on Monday that the latest proposal for a U.S. ceasefire with Iran is “not good enough,” ahead of his fast-approaching deadline for Iran to either reopen the Strait of Hormuz or face major attacks on its civilian infrastructure.

The US President reiterated his threats to attack Irans energy and transportation infrastructure on Tuesday at 8 p.m. ET if the strait is not reopened. However, rising crude oil prices due to supply concerns linked to the Strait of Hormuz could increase inflation concerns. This could shift Federal Reserve (Fed) rate cuts expectations and weigh on the non-yielding assets. Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

Futures pointed to virtually no chance of a move at the April 28-29 Federal Open Market Committee (FOMC) meeting and a 77.5% probability the Fed will stay on hold through the end of the year, according to the CME FedWatch tool.