Gold prices fell more than 1% on Monday (29) as renewed tensions between the United States and Iran pushed oil prices higher, raising concerns over inflation and the prospect of further interest rate hikes.
Spot gold fell 1.03% to $4,045.95 an ounce, while U.S. gold futures for August delivery also declined. The precious metal had already hit a more than seven-month low last week.
The decline followed Iranian missile and drone strikes on U.S. military sites in Bahrain and Kuwait on Sunday, shortly after U.S. President Donald Trump warned Tehran to comply with the terms of a final peace agreement.
The escalation drove Brent crude oil prices higher, stoking fears that rising energy costs could fuel inflation and prompt central banks to keep interest rates elevated.
Higher interest rates typically weigh on gold, as the non-yielding asset becomes less attractive compared with interest-bearing investments. A stronger U.S. dollar, which is on track for its biggest monthly gain in nearly a year, also added pressure by making gold more expensive for overseas buyers. (Reuters/Newswire)