TLDR
- Gold prices declined 1.5% to reach $5,096.51/oz on Monday, with an intraday low of $5,015.23/oz
- Oil prices surged — with Brent temporarily approaching $120/barrel — triggering inflation concerns that pressured gold
- The dollar index climbed as much as 0.7%, creating headwinds for precious metal valuations
- Despite the pullback, gold continues trading above $5,000/oz with year-to-date gains near 18%
- Other precious metals including silver, platinum, and palladium declined Monday, with silver recovering most losses
Precious metals experienced significant downward pressure on Monday as the ongoing US-Israel military engagement with Iran, now in its 10th day, triggered a dramatic rally in crude oil prices and bolstered the US dollar — creating a dual challenge for gold markets.
By mid-morning in London, spot gold had retreated 1.5% to settle at $5,096.51/oz. During the session’s lowest point, prices touched $5,015.23/oz, coming dangerously close to slipping beneath the psychologically important $5,000 threshold. Gold futures contracts showed a 1.1% decline to $5,104.04/oz.
The market downturn followed a dramatic 30% surge in Brent crude prices, which temporarily climbed near $120 per barrel. This spike occurred after coordinated US and Israeli military operations targeted Iranian oil infrastructure during the weekend. Iran retaliated by launching attacks on vessels navigating the Strait of Hormuz, a critical chokepoint responsible for approximately 20% of worldwide oil distribution.
The dramatic oil spike rapidly shifted investor attention toward inflation dynamics — and the implications for monetary policy.
Inflation Fears Put Fed Back in Focus
Elevated crude oil prices have ripple effects throughout the broader economy, potentially accelerating inflationary pressures. Such developments diminish expectations for Federal Reserve interest rate reductions — while potentially increasing the likelihood of rate increases. Gold, as a non-yielding asset, typically underperforms when interest rate expectations trend upward.
The Bloomberg Dollar Spot Index advanced 0.3% on Monday, building on the previous week’s 1.3% gain. Dollar appreciation increases gold’s cost for international purchasers, compounding downward pressure on prices.
“In periods of geopolitically driven market stress, investors sometimes sell assets such as gold to raise cash,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. “Once that phase passes, geopolitical uncertainty typically continues to underpin demand for safe havens on dips.”
This dynamic tension — between safe-haven demand and interest rate concerns — has characterized gold’s volatile price action throughout recent weeks. The precious metal has oscillated between $5,000/oz and the record high near $5,600/oz established in late January.
Gold experienced approximately a 2% decline during the previous week. Although Friday’s disappointing US employment data temporarily boosted expectations for monetary easing, the subsequent oil market surge quickly eclipsed those sentiments.
Other Metals Also Under Pressure
Silver prices momentarily dropped below the $80/oz mark before staging a recovery. The session concluded with silver down 0.9% at $83.82/oz. Platinum experienced a 1.8% decrease while palladium declined 1.7%. Copper futures retreated 0.7% to finish at $12,781.0 per ton.
Notwithstanding Monday’s setback, gold maintains approximately 18% in gains for the current year. Sustained central bank acquisitions have provided consistent underlying support, with China’s central bank extending its gold purchasing streak to 16 consecutive months through February.
Ed Meir, analyst at Marex, indicated in Friday commentary that a rapid resolution to the Middle East conflict would likely diminish dollar strength and support gold prices, whereas a protracted conflict would elevate both yields and the dollar based on inflation expectations. Brent crude was recently trading approximately 12.5% higher for the session.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
