Gold Prices Slip as Iran Conflict and Fed Uncertainty Weigh on Markets

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.