Gold prices edged lower on Monday, weighed down by fading hopes for a near-term U.S. interest rate cut due to surging energy prices, while a weaker dollar helped limit the losses.
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Spot gold fell 0.2% to $5,007.58 per ounce, while U.S. gold futures for April delivery dropped 1% to $5,011.10.
The dollar retreated slightly, making dollar-denominated commodities like gold less expensive for holders of other currencies. Meanwhile, yields on 10-year U.S. Treasury notes declined, which typically increases the appeal of non-yielding gold.
Oil prices remained above $100 per barrel as the U.S.-Israeli war on Iran entered its third week, threatening oil infrastructure and keeping the Strait of Hormuz closed in the largest global supply disruption on record.
Higher oil prices drive inflation by increasing transport and production costs. While gold is traditionally considered an inflation hedge, higher interest rates make yield-bearing assets more attractive, reducing the appeal of the yellow metal.
The Federal Reserve is widely expected to hold interest rates steady for the second consecutive time when it issues its monetary policy statement on Wednesday.
In tandem, U.S. President Donald Trump stated on Sunday that his administration is in talks with seven nations to help secure the Strait of Hormuz. Over the weekend, Trump threatened further strikes on Kharg Island—Iran's primary oil export hub—and stated he is not yet ready to reach a deal to end the war. Trump emphasized that nations heavily dependent on Gulf oil bear the responsibility of protecting the strait.
As for other precious metals, spot silver fell 1.2% to $79.57 per ounce. Platinum rose 0.8% to $2,042.98, and palladium gained 1% to reach $1,566.91.
Source: Reuters
