NEW YORK: Gold prices fell on Monday as a stronger U.S. dollar weighed on bullion and reduced demand from buyers using other currencies, while higher oil prices and fading expectations for near-term Federal Reserve rate cuts added pressure to the non-yielding metal. Spot gold was down 0.7% at $4,716.70 an ounce by 0930 GMT after touching its lowest level in nearly a week earlier in the session. U.S. gold futures for June delivery fell 1.0% to $4,738.90 an ounce.
The pullback came as the dollar strengthened in broader currency trading, making dollar-priced gold more expensive for overseas buyers and undercutting one of bullion’s key sources of support. The move in gold also followed renewed inflation concerns linked to higher crude prices, with Brent crude holding above $100 a barrel after the failure of U.S.-Iran peace talks added to market tension. Rising energy prices have sharpened investor focus on inflation and interest rates, two of the main drivers of gold demand this year.
Gold has also come under pressure from a shift in rate expectations as markets reassessed the chances of easier U.S. monetary policy in the near term. Higher-for-longer interest rate expectations generally weigh on bullion because gold does not pay interest, making it less competitive relative to yield-bearing assets when borrowing costs stay elevated. Monday’s decline extended a broader retreat in bullion prices, which have fallen about 10% since late February even as geopolitical risks have remained high across several regions.
Dollar strength pressures bullion
Recent trading has highlighted how closely gold has been tracking moves in the U.S. currency and changes in expectations for Federal Reserve policy. On April 9, spot gold had risen 1.6% to $4,789.67 an ounce as the dollar index weakened, showing the speed with which sentiment in the precious metals market can turn when currency pressure eases. The latest reversal reinforced that pattern, with investors favoring the dollar over bullion as a defensive holding during a period of rising geopolitical and inflation concerns.
The broader retreat in gold has not been limited to Monday’s session. On March 20, spot gold fell 1.8% to $4,563.64 an ounce during another bout of dollar strength linked to Middle East tensions and firm U.S. monetary policy expectations. That earlier drop, together with the latest move, has underscored that gold’s traditional status as a safe-haven asset has recently been offset by the appeal of the U.S. currency and by the prospect that interest rates could remain restrictive for longer than previously expected.
Oil and rate outlook add pressure
Higher oil prices have added another layer of pressure to the market by reviving concern that inflation could remain sticky, complicating the outlook for central bank easing. Investors have been watching whether energy-driven price pressures could delay any policy pivot by the Federal Reserve, a development that would typically weigh on gold. With crude prices elevated and the dollar firm, traders in bullion have had to contend with a combination of headwinds that has limited buying interest despite persistent global uncertainty and periodic demand for defensive assets.
Monday’s decline left gold trading near a one-week low and showed that currency moves, inflation signals and U.S. rate expectations remain central to the direction of the precious metal. While bullion continues to attract attention during periods of geopolitical stress, the market’s immediate focus remained on the stronger dollar, elevated oil prices and the reduced likelihood of imminent Fed rate cuts. Those factors combined to push spot gold and U.S. futures lower at the start of the week. – By Content Syndication Services.