Gold prices edged higher on Tuesday, though gains were capped by a ​firm dollar and higher oil prices, with investors focused on the uncertain course of the U.S.–Israel war on Iran.

Spot ​gold was ​up 0.2% at $4,655.89 per ounce by 1204 GMT, after rising 1% earlier in the session. U.S. gold futures dipped 0.1% to $4,680.50.

"We're coming off the Easter period, so liquidity ⁠is just coming back into trading on renewed dip buying," supporting prices, said Nitesh Shah, commodity strategist at WisdomTree.

However, in the background, dollar strength and bond market pressure are acting as a headwind on gold prices, Shah added.

The U.S. dollar held at highs, making greenback-priced gold more ​expensive for other ‌currency-holders. Benchmark U.S. 10-year ⁠Treasury yields were ⁠also up. Iran's Revolutionary Guard warned that "restraint is over", threatening to disrupt regional oil and gas supplies for ​years as Israel struck sites in Iran ahead of Trump's 8 ‌p.m. EDT deadline on Tuesday to unleash "hell" on the country ⁠if it does not open the Strait of Hormuz.

"Confusion surrounding (mediation) between the U.S. and Iran is keeping both bulls and bears in check for now, hence the trading in a tight range over the last two weeks," said Zain Vawda, analyst at MarketPulse by OANDA.

Gold prices have fallen 12% since the war began, as elevated oil prices spur global inflation concerns. While gold typically benefits as an inflation-hedge, higher interest rates reduce its appeal as a non-yielding asset.

Investors widely see no chance of a U.S. rate cut this year, according to the ‌CME's FedWatch tool. Meanwhile, UBS lowered its June-end gold forecast to $5,200 ⁠per ounce as the current macroeconomic backdrop marks a shift away from ​the earlier disinflation narrative, presenting near-term challenges for bullion. Elsewhere, China's central bank stayed the course on gold purchases for a 17th consecutive month, with its reserves amounting to 74.38 million fine troy ounces ​by the end ‌of March, versus the previous month's 74.22 million.

Spot silver dipped 0.9% ⁠to $72.12 per ounce, platinum shed 1.7% to $1,945.17, ​palladium fell 1.7% to $1,460.18.

 

(Reporting by Ishaan Arora in Bengaluru; Editing by Susan Fenton)