(Updates prices for European mid-session trade)
<ul>
<li>Ceasefire in Middle East tested amid renewed U.S.-Iran attacks</li>
<li>Gold down over 13% since start of Iran war</li>
<li>Investors eye upcoming U.S. jobs data</li>
</ul>
By Anjana Anil
May 5 (Reuters) - Gold prices rebounded on Tuesday, after dropping to a five-week low in the previous session, as oil prices eased, but persistent Middle East tensions and inflation concerns kept gains in check.
Spot gold (XAU=) rose 0.8% to $4,557.75 per ounce by 1138 GMT, after touching its lowest level since March 31 on Monday. U.S. gold futures (GCcv1) for June delivery gained 0.8% to $4,568.50.
Oil prices slipped a day after the U.S. launched an operation aimed at reopening the Strait of Hormuz to shipping, although exchanges of fire between the U.S. and Iran limited the decline. (O/R)
“A pullback in the oil price on profit-taking, despite tensions being intensified in the Middle East, has given a lift to gold from a five-week low, as fear seems to have become normalised,” said independent analyst Ross Norman. The fragile ceasefire in the region appeared to be fraying once more as the U.S. and Iran launched attacks, competing for control of the Strait of Hormuz, amid conflicting reports about ships passing through the strait in recent days. Since the start of the U.S.-Israeli war on Iran in late February, gold prices have been inversely proportional to crude. Despite being a hedge against geopolitical volatility, soaring energy costs have stoked fears of a spike in inflation and lowered hopes of rate cuts, pushing gold down more than 13%.
Non-yielding bullion loses its appeal in high-interest-rate environments as investors turn to assets that offer better returns. “Although gold’s fundamentals point to good gains later this year, the market is clearly in an extended consolidation phase just now and through the physical market is attempting to establish a price floor, especially after epic moves in Q1,” Norman said.
Meanwhile, investors are also looking out for a slew of jobs data, including job openings, the ADP employment report, and the April payrolls report this week, which is likely to govern the U.S. Federal Reserve’s policy path.
Spot silver (XAG=) firmed 1.3% to $73.65 an ounce, platinum (XPT=) gained 1.7% to $1,978.20, and palladium (XPD=) rose 1.8% to $1,506.33.

On May 4 (ET), the US military announced it had forcibly opened a free-passage corridor through the Strait of Hormuz. Iran immediately fired warning shots at a US destroyer, while Trump threatened that any attack on American vessels would result in Iran being "blown off the face of the earth." Meanwhile, Iran had just submitted a 14-point ceasefire proposal to Washington — covering US troop withdrawal, lifting of the naval blockade, and sanctions relief — only to be met with Trump's flat rejection: "unacceptable." With gunfire and diplomacy playing out simultaneously, will the Middle East tip toward war or peace? And what does it mean for oil prices and global assets? Share your take below.

On May 4 (ET), the US military announced it had forcibly opened a free-passage corridor through the Strait of Hormuz. Iran immediately fired warning shots at a US destroyer, while Trump threatened that any attack on American vessels would result in Iran being "blown off the face of the earth." Meanwhile, Iran had just submitted a 14-point ceasefire proposal to Washington — covering US troop withdrawal, lifting of the naval blockade, and sanctions relief — only to be met with Trump's flat rejection: "unacceptable." With gunfire and diplomacy playing out simultaneously, will the Middle East tip toward war or peace? And what does it mean for oil prices and global assets? Share your take below.

US-Iran Strait Showdown! Is There Still Room for Negotiation?

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PRECIOUS-Gold rebounds as oil eases; inflation concerns linger