Gold prices fell on Monday as traders assessed developments in the Middle East and their potential impact on inflation and interest rates.
Spot gold fell 0.3% to $4,362.60 an ounce by 04:17 GMT, after reaching a one-week high on Friday. U.S. gold futures declined 0.6% to $4,400.20.
Iran and the United States exchanged fresh threats. President Donald Trump warned that Iran would face economic failure or the elimination of its leadership if it did not reach an agreement, while the Iranian military said it would respond forcefully to any new attack.
Oil prices declined amid hopes that diplomatic efforts to resolve the conflict involving Iran could gain momentum this week during a United Nations meeting. Investors were also focused on a partial recovery in Saudi oil shipments despite continued attacks by Yemen’s Houthi movement.
The prospect of a new global cycle of monetary tightening is also emerging, with some of the world’s major central banks raising interest rates and signaling that further increases may be needed to curb inflation fueled by the conflict involving Iran.
The Bank of Japan became the latest major central bank to tighten monetary policy on Friday, following the U.S. Federal Reserve’s rate hike earlier last week and the European Central Bank’s move the week before.
Although gold is traditionally viewed as a hedge against inflation, higher interest rates can weigh on demand for the precious metal by increasing the appeal of interest-bearing assets.
Among other precious metals, spot silver rose 0.2% to $66.37 an ounce, platinum fell 0.1% to $1,798.31, and palladium gained 0.6% to $1,309.65.
Source: Reuters
