Gold prices eased on Monday as rising energy costs dampened expectations for near-term U.S. interest rate cuts, though a slightly weaker dollar provided a floor for the metal's losses. Spot gold fell 0.2% to $5,007.58 per ounce by 0240 GMT, while U.S. gold futures for April delivery dropped 1% to $5,011.10.
The conflict in Iran, now entering its third week, has kept oil prices above $100 per barrel, threatening global energy infrastructure and keeping the Strait of Hormuz closed. "If higher energy prices drive inflation and the Federal Reserve remains cautious about cutting rates, real yields could stay elevated, acting as a headwind for gold," said Christopher Wong, strategist at OCBC. While gold is traditionally a hedge against inflation, high interest rates increase the opportunity cost of holding the non-yielding asset.
The Federal Reserve is widely expected to hold interest rates steady on Wednesday. Meanwhile, geopolitical tensions remain high as President Donald Trump indicated his administration is in talks with seven nations to secure the Strait of Hormuz. Trump also threatened further strikes on Iran’s Kharg Island oil terminal, stating he is not yet ready for a deal to end the war. In other precious metals, silver fell 1.2% to $79.57 per ounce, while platinum rose 0.8% to $2,042.98.