Gold Prices Plummet Amid Dollar Surge and Geopolitical Tensions

Gold prices took a significant hit on Tuesday, dropping more than 4% at one stage, as investors turned to the U.S. dollar for safety amid escalating geopolitical tensions from the U.S.-Israeli air war on Iran.

By 1156 GMT, spot gold was down 3.3% to $5,150.89 an ounce, while U.S. gold futures slipped 2.8% to $5,161.50. The dollar's rally and higher U.S. Treasury yields posed substantial challenges to gold, said independent analyst Ross Norman.

Geopolitical tensions pushed global oil and gas shipping rates higher, intensifying inflation concerns. While gold is traditionally seen as a hedge against inflation, current conditions could keep borrowing costs elevated, cooling demand for the non-yielding asset amid expectations for the Fed to maintain rates.