Gold prices retreated below critical support levels during Asian trading hours on Monday, pressured by ongoing geopolitical tensions stemming from the U.S.-Israel military campaign against Iran and growing caution ahead of a pivotal Federal Reserve policy meeting later this week.
Spot gold declined 0.5% to $4,995.21 per ounce, while gold futures dropped a sharper 1.3% to $4,996.96 per ounce. The pullback reflects a broader struggle for the precious metal, which has failed to fully capitalize on its traditional safe-haven appeal amid the escalating Middle East conflict.
The Iran situation continued to rattle financial markets after U.S. and Israeli forces struck a major Iranian oil export terminal over the weekend, prompting strong retaliatory threats from Tehran. Crude oil prices held firmly above $100 per barrel, stoking fears of energy-driven inflation that could complicate the Federal Reserve's path forward on interest rates. While President Donald Trump signaled that diplomatic talks were underway to reopen a key Iranian-blockaded shipping corridor, Tehran has consistently dismissed any near-term resolution.
The prospect of a hawkish Federal Reserve stance is arguably the biggest headwind for gold right now. With inflation proving stubborn — partly fueled by elevated oil costs — investors are pricing in the possibility that the central bank may signal a prolonged period of elevated interest rates. Higher yields strengthen the U.S. dollar, which in turn diminishes demand for non-yielding assets like gold. ANZ analysts highlighted that a firmer dollar, rising bond yields, and trader liquidations driven by margin calls have collectively suppressed bullion prices. That said, the bank maintained that gold's fundamental case as a hedge against geopolitical risk remains valid over the longer term.
Elsewhere in metals markets, spot silver fell 1.8% to $79.18 per ounce, while spot platinum edged 0.2% higher to $2,031.43 per ounce as the dollar continued to strengthen across the board.
