Gold prices dropped more than 3 percent on Monday, extending their decline to the lowest level in nearly four months, as escalating tensions in the Middle East fueled inflation concerns and strengthened expectations of higher global interest rates.
Spot gold fell 3.3 percent to $4,340.09 per ounce by 01:00 GMT, marking its ninth consecutive session of losses. Earlier in the day, the metal touched its weakest level since January 2, and has lost over 10 percent in the past week alone.
U.S. gold futures for April delivery also declined sharply, falling 5 percent to $4,447.
Meanwhile, oil prices held above $110 per barrel as investors weighed ongoing threats between the United States and Iran over potential strikes on energy infrastructure, alongside the possibility of releasing significant volumes of Iranian oil into global markets.
The closure of the Strait of Hormuz has further driven up crude prices, intensifying inflationary pressures through increased transportation and production costs.
Although gold is traditionally seen as a hedge against inflation, rising interest rates tend to reduce its appeal, as it does not offer yields.
Market expectations have also shifted toward tighter monetary policy, with investors increasingly anticipating that the U.S. Federal Reserve will raise interest rates this year. According to the CME FedWatch tool, the probability of a rate hike by December has risen to around 27 percent.
Other precious metals also saw declines. Spot silver fell 3.3 percent to $65.55 per ounce, platinum dropped 4.4 percent to $1,838.45, and palladium edged down 0.4 percent to $1,398.50.
Agencies
