Gold prices hovered just below record highs on Tuesday as investors balanced heightened geopolitical tensions in the Middle East with deepening political uncertainty in the United States, while positioning cautiously ahead of fresh inflation data expected to influence the outlook for US monetary policy.
Spot gold was little changed at $4,588.9 per troy ounce in early European trading, after climbing to an all-time high of $4,629.4 in the previous session. US gold futures for March eased 0.4 per cent to $4,596.81 an ounce, reflecting profit-taking and consolidation following a strong multi-session rally.
The precious metal continues to draw support from safe-haven demand amid persistent geopolitical risks, including concerns over potential escalation in the Middle East and uncertainty surrounding diplomatic and security developments in the region. At the same time, political tensions in the United States—linked to fiscal policy debates and the broader election cycle—have added to investor caution, reinforcing gold’s appeal as a hedge against instability.
Market attention is now turning to upcoming US inflation data, which could shape expectations around the Federal Reserve’s interest rate trajectory. Softer inflation readings may strengthen the case for earlier or deeper rate cuts, a scenario that typically supports non-yielding assets such as gold. Conversely, signs of persistent price pressures could limit near-term upside by keeping yields elevated.
Despite the slight pullback, gold remains underpinned by expectations that global central banks will maintain a cautious policy stance amid slowing growth and rising geopolitical risks. A relatively steady US dollar and easing Treasury yields in recent sessions have also helped sustain bullion prices near historic levels.
Analysts note that while short-term volatility is likely as investors react to macroeconomic data, the broader trend for gold remains supported by structural factors, including geopolitical fragmentation, strong central bank buying, and ongoing demand for portfolio hedging.