Gold prices edged lower on Monday as a stronger US dollar and rising bond yields weighed on bullion, while renewed tension in the Middle East pushed oil prices higher and reignited inflation concerns.
Spot gold slipped 0.7% to $4,793.98 per ounce by early Asian trading, touching its lowest level since April 13 earlier in the session. US gold futures for June delivery dropped 1.4% to $4,813.60.
War Trade Returns as Ceasefire Uncertainty Grows
Market sentiment shifted after signs emerged that the fragile US-Iran ceasefire may be breaking down. According to Ilya Spivak, head of global macro at Tastylive, investors quickly reverted to familiar “war trade” dynamics.
He noted that rising crude oil prices fed into higher inflation expectations, lifting both US Treasury yields and the dollar—conditions that typically pressure non-yielding assets such as gold.
Dollar and Yields Pressure Bullion
The dollar index strengthened on the day, making dollar-denominated gold more expensive for buyers holding other currencies. Benchmark 10-year US Treasury yields climbed around 0.5%, further reducing gold’s appeal as an inflation hedge.
Although gold is traditionally viewed as protection against rising prices, elevated interest rates tend to dampen demand by increasing the opportunity cost of holding the metal.
Oil Jumps as Hormuz Risks Disrupt Markets
Oil prices surged as tensions escalated following reports that shipping through the Strait of Hormuz has once again been severely restricted. The vital route handles a significant share of global oil flows, and renewed disruption has unsettled energy and equity markets alike.
The United States reportedly seized an Iranian cargo vessel attempting to bypass its blockade, while Tehran warned of retaliation. Iran also said it would not participate in a second round of negotiations that Washington hoped to begin before the ceasefire expires on Tuesday.
Gold Down Since February Strikes
Gold prices have fallen roughly 8% since late February, when the United States and Israel launched strikes on Iran. Since then, concerns that higher energy prices could sustain inflation and keep global interest rates elevated have weighed on bullion.
Stock markets wavered on Monday as investors assessed the risk that the ceasefire may collapse before its scheduled end.
Physical Demand Remains Soft
In the physical market, gold demand in India—one of the world’s largest consumers—remained subdued during a major buying festival. Record-high prices discouraged jewellery purchases, offsetting a modest increase in investment demand.
Other Precious Metals
Among other precious metals:
- Spot silver fell 0.9% to $80.04 per ounce
- Platinum declined 0.5% to $2,093.56
- Palladium was steady at $1,558.60
