Gold drops 2% amid Middle East tensions and rising dollar
Gold prices slipped 2 percent on Monday, with spot gold trading at $4,523.23 per ounce by 2:05 p.m. ET. US gold futures closed 2.4 percent lower at $4,533.30, reflecting heightened US‑Iran tensions that boosted the dollar and revived inflation concerns.
The flare‑up in the Strait of Hormuz, where Iran struck several vessels and ignited a UAE oil terminal, prompted President Trump to deploy the US Navy, marking the most serious escalation since the cease‑fire a month ago. The dollar firmed and Brent crude jumped over 5 percent, making dollar‑priced metals more costly for holders of other currencies.
Rising energy prices have intensified inflation fears, strengthening the view that central banks will keep interest rates elevated for an extended period. Barclays, joining other brokers, now expects no rate cuts from the Federal Reserve this year. Upcoming US data include job openings, the ADP employment report and the April payrolls, which could further influence market sentiment.
Analyst Bart Melek of TD Securities noted that the latest developments have eroded confidence, keeping inflation on the agenda and signaling a hawkish stance on rates. He identified strong support for gold around $4,200, but warned that uncertainty and potential rate hikes may prompt traders to unwind positions in the short term.
Precious metals other than gold also fell: spot silver dropped 3.2 percent to $72.95, platinum slipped 1.7 percent to $1,955.95, and palladium declined 2.9 percent to $1,481.00.
