Gold prices moved in a volatile range on Monday as traders assessed rising global bond yields alongside renewed geopolitical tensions involving Iran.
Precious Metal Gives Up Early Gains
By 07:24 ET (11:24 GMT), spot gold slipped 0.1% to $4,536.03 an ounce, while gold futures fell 0.5% to $4,539.59 an ounce.
Earlier in the trading session, gold had posted modest gains after previously touching its lowest level since March 30.
The metal has weakened compared with levels seen at the beginning of the Iran conflict in late February, as investors shifted toward the U.S. dollar as a preferred safe-haven asset. Market participants believe the U.S. economy may be relatively insulated from the energy shock because of its position as a major oil exporter.
A stronger U.S. dollar typically reduces overseas demand for gold by making it more expensive in other currencies.
Rising Inflation Expectations Hurt Gold Demand
Investors have also become increasingly concerned that the conflict could intensify inflationary pressures globally.
Higher inflation raises the possibility that central banks may keep interest rates elevated or even tighten policy further, reducing the attractiveness of non-interest-bearing assets such as gold.
Drone Incidents Raise New Questions About Ceasefire Stability
Over the weekend, a drone strike caused a fire at a nuclear installation in the United Arab Emirates, while Saudi Arabia reported intercepting three drones.
The incidents increased uncertainty surrounding the fragile ceasefire between the United States and Iran.
President Donald Trump stated on social media that “the clock is ticking” for Iran to reach a peace agreement or potentially face renewed U.S. military action.
China Visit Produces No Immediate Diplomatic Progress
Last week, some investors had hoped Trump’s visit to China could help unlock progress in negotiations with Iran, given Beijing’s role as a major importer of Iranian crude oil.
However, the summit concluded without any immediate breakthrough or commitments from China.
“The weekend […] saw a return of concerns over the ongoing war between the U.S. and Iran,” said David Morrison, Senior market Analyst at Trade Nation, in a note.
“These fell out of focus while the Trump administration was in Beijing. But they bounced back into sight as it became painfully apparent that the Chinese trip was a non-event, while Iran appears in no mood to accede to the U.S. peace plan.”
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