Gold prices traded higher in the domestic futures market on Tuesday, tracking firm global cues and improved sentiment amid easing dollar pressure and hopes of renewed geopolitical talks.On the Multi Commodity Exchange (MCX), gold futures for the June 2026 contract rose Rs 1,981, or 1.30%, to Rs 1,54,053 per 10 grams. The contract touched a high of Rs 1,54,170 and a low of Rs 1,52,700 during the session.The August 2026 contract also gained Rs 2,024, or 1.31%, to trade at Rs 1,56,645 per 10 grams, after hitting an intraday high of Rs 1,56,855.Meanwhile, the October 2026 contract edged higher by Rs 1,231, or 0.78%, to Rs 1,58,401 per 10 grams.Separately, in international market, spot gold rose 1.5% to $4,808.69 per ounce by 11:31 a.m. ET, while US gold futures gained 1.4% to $4,833.10, Reuters reported.Market sentiment improved after reports that negotiating teams from the US and Iran could return to Islamabad this week to restart talks, following the collapse of weekend discussions that led Washington to impose a blockade on Iranian ports.“The direction of the gold market will depend on how the talks go in Pakistan and what kind of progress is made heading into the weekend. If we see positive news, metals will continue higher,” said Bob Haberkorn, senior market strategist at RJO Futures, Reuters quoted.“Lower dollar, lower oil right now is helping gold out, being that when the war started, there was a rush to cash and a concern about being able to accumulate energy supplies,” he added.The US dollar drifted lower while oil prices also eased, making dollar-denominated bullion more affordable for holders of other currencies.Data showed US producer prices increased less than expected in March as the cost of services remained unchanged, although rising energy prices linked to the Iran war continued to fuel inflation pressures.Despite being seen as an inflation hedge, gold tends to lose appeal in a higher interest rate environment since it does not offer yield.Traders are now pricing in a 28% probability of a US rate cut this year, compared with expectations of two rate cuts before the conflict began.“As long as the market does not begin to seriously consider a rate hike by the US Federal Reserve – there are no signs of this so far – the gold price is unlikely to fall much further,” analysts at Commerzbank said.Among other precious metals, spot silver surged 4.7% to $79.12 per ounce, platinum rose 0.9% to $2,088.13, while palladium edged 0.2% lower to $1,571.02.

US wholesale prices rose sharply in March as the Iran war drove up energy costs, adding to inflation pressures and complicating the Federal Reserve’s policy outlook.Producer prices, which measure inflation at the wholesale level before it reaches consumers, rose 0.5% from February and 4% from March 2025, marking the biggest annual increase in more than three years, AP reported.Energy prices surged 8.5% month-on-month, reflecting the impact of the Middle East conflict on global oil markets.However, core producer prices –which exclude volatile food and energy components- rose a modest 0.1% from February and 3.8% year-on-year, indicating relatively contained underlying inflation.The rise in wholesale inflation adds to challenges for the US Federal Reserve, which has been under pressure from President Donald Trump to cut interest rates, even as some policymakers lean toward tightening due to persistent price pressures.Food prices, a politically sensitive component ahead of next year’s midterm elections, declined 0.3% in March after rising 2.4% in February.Economists track wholesale inflation closely as it provides early signals on consumer prices, with components such as healthcare and financial services feeding into the Fed’s preferred gauge — the personal consumption expenditures (PCE) index.“The decline in food prices is overdue, and welcome news for everyone,” Carl Weinberg, chief economist at High Frequency Economics, said. “Food price increases are at the core of political arguments over affordability.”The latest data follows a sharp rise in consumer inflation, with gasoline prices pushing the consumer price index up 3.3% year-on-year in March — the biggest increase since May 2024 — and 0.9% month-on-month, the steepest gain in nearly four years.Meanwhile, the International Energy Agency (IEA) warned that the Iran war could lead to an annual decline in global oil demand for the first time since the pandemic.The agency said oil demand is expected to fall by an average of 80,000 barrels per day this year, a sharp reversal from its earlier forecast of an increase of 850,000 barrels per day.The drop in demand has been driven by attacks on energy infrastructure and the shutdown of the Strait of Hormuz, with the IEA projecting a decline of 1.5 million barrels per day in the current quarter.While the initial impact has been concentrated in the Middle East and Asia-Pacific, demand destruction is expected to spread as oil prices rise and supply constraints persist.

Britain is heading for “stagflation”, according to at least one gloomy forecast, as energy prices bite and inflation jumps as a result of the Iran war.

Stagflation – a combination of rising inflation, higher unemployment and low or zero economic growth – is seen as a “worst of both worlds” scenario because it is hard for policymakers to make clear choices.

If they boost employment, that only adds to inflation. If they fight inflation, that hurts growth.

Thomas Pugh, chief economist at RSM UK, said: “President Trump’s announcement of a naval blockade of the Strait of Hormuz has shifted the focus back to the risks of higher energy prices and recession. It’s now looking inevitable that the UK is in for another bout of stagflation, even if inflation won’t go as high as in 2023.

“Further constraining supply leaving the region pushes energy prices to levels that would trigger demand destruction in Europe, the UK and Asia. That would tip the UK into recession and potentially force the Bank of England to raise interest rates.”

Inflation hit 12.8 per cent in 2023. It is now at 3.3 per cent, according to official March figures.

Last time the Bank of England met to discuss rates, it held them at 3.75 per cent. Before the war, the strong expectation was that rates could come down two or three times this year, cutting borrowing costs for homeowners and businesses.

Economists still say the Bank can resume its original path as long as the Iran conflict doesn’t drag out past the summer. Inflation, the Bank thought, was coming down prior to the first attack.

Not all City economists are so pessimistic. None thinks the economy is about to boom, but they doubt a recession looms.

Paul Dales, chief UK economist at Capital Economics, said: “While acknowledging the huge uncertainty, we think it is more likely that the UK economy will stagnate rather than contract significantly. And because the labour market is much weaker now than in 2021-22, this bout of inflation will probably be milder and shorter, perhaps with inflation rising from 3 per cent in February to a peak of 4 per cent around the turn of the year. And with interest rates already reasonably high, I doubt the Bank of England will raise interest rates in response.”

However, Mr Pugh said the UK will suffer stagflation even if the ceasefire is resumed because of the damage done to consumer confidence by higher fuel and mortgage costs.

He added: “Energy prices at current levels are still enough to push inflation above 3 per cent by the end of the year. Once we add in higher shipping and raw material costs and supply chain disruptions, it’s easy to get to inflation of around 3.5 per cent/4 per cent by the end of the year. That’s significantly higher than the 2 per cent to 2.5 per cent we were expecting back in February.”

Meanwhile, business bosses are also concerned. HSBC CEO Georges Elhedery told Bloomberg: “We’re saddened and concerned with what’s happening in the Middle East, and we’re concerned not just with what’s happened, but also with how long this will take. Unfortunately, some of these uncertainties have initially started to weigh on general confidence.”