Gold prices declined on Monday but bounced back from deeper intraday losses as escalating tensions in the conflict involving the U.S., Israel and Iran lifted both oil prices and the U.S. dollar.
Despite the drop, bullion stayed comfortably above the $5,000-per-ounce threshold as geopolitical uncertainty continued to drive demand for safe-haven assets.
By 05:20 ET (09:20 GMT), spot gold was down 1% at $5,117.23 per ounce, while gold futures slipped 0.7% to $5,124.66 per ounce. Earlier in the trading session, spot prices had briefly fallen to $5,015.23 per ounce before rebounding.
Gold holds above $5,000 as Iran conflict fuels safe-haven demand
The precious metal has attracted increased demand since the outbreak of the U.S.-Israel conflict with Iran. However, its upward momentum has been restrained by concerns that the inflationary impact of the war could push major central banks toward a more hawkish policy stance.
Over the past week, the U.S. dollar has outperformed gold, while oil has led gains across the commodities complex as traders anticipate possible disruptions to global crude supply linked to the conflict.
Both the dollar and oil surged Monday following U.S. and Israeli attacks on Iranian oil infrastructure, a development viewed by markets as a potential escalation of the war. The U.S. dollar index rose 0.6%, while Brent crude rallied sharply — climbing as much as 30% and moving beyond the $100-per-barrel level.
Oil later pared some of its gains after the Financial Times reported that G7 countries were discussing the potential release of emergency petroleum reserves to counter supply shortages.
Separately, Bloomberg reported that Saudi oil producers had begun offering cargoes on the spot market, a relatively uncommon move.
During the weekend, Iran was also reported to have targeted vessels in the Strait of Hormuz, effectively obstructing a critical shipping route that carries around 20% of the world’s oil supply.
Gold had already declined by roughly 2% last week as prices fluctuated between the $5,000-per-ounce level and the record high close to $5,600 reached in late January. Since then, the metal has seen sharp volatility amid heightened speculative activity and growing uncertainty over the future direction of interest rates.
A significantly weaker-than-expected U.S. nonfarm payrolls report released on Friday briefly fueled expectations of lower interest rates, although attention has since shifted toward the inflationary implications of rising oil prices.
Silver rebounds after dipping below $80
Other precious metals also traded lower Monday, with silver briefly dropping below $80 per ounce during early trading.
However, spot silver regained most of its losses and was down 0.6% at $83.8025 per ounce.
Platinum also edged lower, with spot prices falling 0.6% to $83.8060 per ounce, although the metal recovered from its earlier session lows.
Like gold, both silver and platinum have experienced significant volatility since the sharp market decline in late January. Nevertheless, their safe-haven appeal and expectations for stronger industrial demand have helped keep both metals in positive territory for the year.
Among industrial metals, copper futures declined 0.4% to $12,817.0 per ton.
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