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Gold prices declined on Monday but remained well above key levels as investors balanced safe-haven demand against a stronger U.S. dollar and surging oil prices following an escalation in the conflict between the United States, Israel, and Iran.
By 02:40 ET (06:40 GMT), spot gold fell 1% to $5,117.82 per ounce, while U.S. gold futures dropped 0.7% to $5,123.66 per ounce.
The precious metal had earlier slipped to an intraday low of $5,015.23 per ounce, before recovering part of those losses.
Safe-haven demand keeps gold above $5,000
Despite Monday’s decline, gold remained firmly above the $5,000 per ounce level, supported by heightened geopolitical tensions stemming from the expanding Middle East conflict.
The escalation followed U.S. and Israeli strikes on Iranian oil facilities, raising fears of broader disruptions to global energy supplies and intensifying uncertainty in financial markets.
However, gold’s gains have been tempered by concerns that the conflict could trigger higher global inflation, prompting major central banks to maintain tighter monetary policies for longer.
As a result, the U.S. dollar has outperformed gold over the past week, while oil has led gains across commodity markets.
Dollar and oil surge on supply fears
The U.S. Dollar Index rose 0.6% on Monday, benefiting from increased demand for safe-haven assets.
At the same time, oil prices surged dramatically as the conflict threatened shipping routes and energy infrastructure across the Middle East.
Brent crude jumped as much as 30%, breaking above $100 per barrel, reflecting fears that supply disruptions could intensify if the conflict continues.
Oil prices later trimmed some gains after the Financial Times reported that G7 nations were considering releasing emergency oil reserves to stabilize markets.
Separately, Bloomberg reported that Saudi Arabia was offering oil on spot markets, an unusual move that suggests producers are attempting to offset supply shortages.
Hormuz shipping disruptions heighten risks
Energy markets remain particularly concerned about the Strait of Hormuz, where Iran has reportedly attacked several vessels over the weekend.
The narrow waterway normally handles about 20% of global oil shipments, making it one of the most critical energy transit routes in the world.
Any prolonged disruption to shipping through the strait could significantly tighten global energy supplies.
Gold volatility persists
Gold has experienced sharp swings in recent weeks, fluctuating between $5,000 and the record high near $5,600 reached in late January.
The metal fell around 2% last week, reflecting volatile trading conditions driven by geopolitical tensions, speculative activity, and uncertainty surrounding global interest rate policies.
A weaker-than-expected U.S. nonfarm payrolls report released on Friday briefly raised hopes that the Federal Reserve might lower interest rates. However, those expectations have been tempered by fears that higher oil prices could push inflation higher.
Other precious metals also weaken
Other precious metals also declined on Monday, although they recovered part of their earlier losses.
- Silver briefly dropped below $80 per ounce before rebounding to trade 0.6% lower at $83.80.
- Platinum fell 0.6%, also recovering from earlier intraday lows.
Both metals have experienced sharp volatility since a major market selloff in late January but remain higher for the year, supported by safe-haven demand and expectations for stronger industrial consumption.
In industrial metals, copper futures slipped 0.4% to $12,817 per ton.
With geopolitical tensions intensifying and energy markets under pressure, gold and other commodities are likely to remain volatile as investors weigh inflation risks against safe-haven demand.
