Gold prices fell 2.6% on Monday as heightened U.S.-Iran tensions boosted the dollar and reinforced inflation concerns, keeping expectations of higher-for-longer interest rates alive.
"The latest news clearly didn't give the market confidence that everything is going to be okay and again raised the specter of inflation issues, along with fairly hawkish signals to the market on interest rates," said Bart Melek, global head of commodity strategy at TD Securities.
Spot gold was down 2.6% at $4,524.40 per ounce at 4:15 p.m. ET, after reaching a two-week high of $4,760 on Friday on hopes of a peace deal. U.S. gold futures for June delivery settled 2.4% lower at $4,533.30. The U.S. dollar firmed after Iran hit several ships in the Strait of Hormuz, and Brent crude prices jumped more than 5%, intensifying inflation fears.
Even as gold serves as a hedge against geopolitical uncertainty, it loses appeal in a high-rate environment as it offers no yield. Barclays joined other brokerages in betting on no policy easing from the U.S. Federal Reserve this year. Investors are now looking to U.S. job openings, the ADP employment report, and the April payrolls report due this week for further signals.
This article is for informational purposes only and does not constitute investment advice.
