Gold fell by more than 2% on Monday, affected by a stronger dollar that weighed on dollar-denominated bullion. Moreover, increasing energy expenses have intensified worries about inflation, which further reduces the chances of upcoming interest rate reductions. Spot gold saw a decrease of 2.5%, trading at $5,041.89 per ounce, as of 0048. Gold futures in the U.S. for April delivery fell by 2.1%, closing at $5,049.40. The dollar stayed near the three-month high achieved last week, leading to increased expenses for bullion for those using other currencies. The U.S. 10-year Treasury yields have climbed to a level not observed in almost a month, which raises the opportunity cost of holding non-yielding gold.

Concerns about inflation due to oil prices and delayed expectations for interest rate cuts have likely strengthened U.S. yields and the dollar, overshadowing safe-haven demand and leading to a drop in gold prices. Amid rising geopolitical tensions in the Middle East, Iran announced on Monday the appointment of Mojtaba Khamenei as the successor to his father, Ali Khamenei, signaling that hardliners continue to hold a firm grip on power. Crude oil prices saw a notable rise, exceeding $100 per barrel, fueled by worries about reduced supply and prolonged disruptions to oil shipments through the Strait of Hormuz.

Investors expect that the U.S. Federal Reserve will keep interest rates steady after its two-day meeting on March 18, as indicated by the CME Group’s FedWatch tool. The likelihood of a June hold, which was below 43% last week, has now increased to over 51%. Share futures fell in Asia on Monday as rising oil prices raised concerns about increasing living costs and the potential for higher interest rates globally.

Meanwhile, data on Friday indicated that U.S. nonfarm payrolls declined by 92,000 jobs last month, contrasting with economists’ expectations for a 59,000 increase, while the unemployment rate rose to 4.4%. Spot silver fell by 4% to $80.99 per ounce. Spot platinum fell by 3.8% to $2,054.65, and palladium dropped by 2.1% to $1,590.32.