Gold Rebounds As Dollar Dips Ahead Of Inflation Test

(RTTNews) - Gold traded higher on Tuesday after falling around 3 percent to hit a two-week low in the previous session amid escalating Middle East tensions and hawkish Fed bets.

Spot gold rose 0.4 percent to $4,018.05 an ounce while U.S. gold futures were up half a percent at $4,025.10.

The U.S. dollar edged lower after rising in the previous session amid an escalation in tensions between the United States and Iran.

Eurozone, U.S. and U.K. 10-year bond yields rose to eight-week highs as crude oil futures scaled one-month high after the announcement of a renewed U.S. blockade of Iranian ports near the Strait of Hormuz.

U.S. President Donald Trump also declared America as the "guardian of Strait of Hormuz" and proposed to charge a 20 percent transit fee on cargo passing through the strategic waterway, posing a threat to global supply chain.

In a post on X, Iranian foreign minister Seyed Abbas Araghci mocked Trump over his proposal and said Iran has always been the GUARDIAN of the Strait and will remain so FOREVER. "20 percent is of course too much. We will be fair," Araghchi wrote.

Meanwhile, after the United States launched fresh strikes on Iran for the third consecutive night, Tehran responded with attacks targeting Bahrain, Jordan and two tankers associated with the United Arab Emirates.

An Indian crew member was killed and eight others injured after Iranian missiles struck two UAE tankers in the Strat of Hormuz.

Houthis launched missiles and drones at Saudi Arabia's Abha airport after strikes on Sanaa. Russia has sent one of its most secure airborne command aircraft to Tehran, as per flight tracking data.

On the economic front, traders await the release of U.S. CPI and PPI inflation data as well as Federal Reserve Chair Kevin Warsh's testimony before Congress that could shape the outlook for interest rates.

Money markets are pricing in nearly a 50 percent probability of a Federal Reserve rate hike in July after Governor Christopher Waller expressed caution about inflation and said a hot core inflation reading this week could prompt the FOMC to consider tightening policy at its late-July meeting.