Gold ends lower as dollar strengthens

Gold bars

Gold prices settled lower on Tuesday as a stronger US dollar weighed on the metal, despite heightened safe-haven demand driven by ongoing military tensions in the Middle East.

August gold futures fell 0.30%, or $10.4, to close at $3,406.9 per ounce.

The US dollar index, which measures the currency against a basket of six major peers, rose 0.81% to 98.00 as of 9:45 p.m. Mecca time.

Israel and Iran continued exchanging military strikes for a fifth consecutive day, fueling concerns over a potential escalation in regional conflict. US President Donald Trump reiterated his call for Iran to surrender unconditionally, further stoking geopolitical fears.

Meanwhile, a survey by the World Gold Council showed that central banks around the world expect to increase their gold reserves over the next five years, while reducing their holdings of US dollars.

In a related note, analysts at Citi said gold prices are likely to retreat below $3,000 per ounce in the coming quarters, as the rally that pushed the metal to record highs loses momentum.