Gold prices saw a slight uptick on Tuesday, aided by a softer dollar; nonetheless, they are heading towards their largest monthly drop in more than 17 years, as climbing energy expenses have lowered hopes for a U.S. interest rate cut this year. Spot gold rose by 0.8% to $4,544.19 per ounce as of 0114. Gold futures in the U.S. for April delivery rose by 0.3%, hitting a price of $4,573.20.

The U.S. dollar saw a drop, leading to a reduction in the price of dollar-denominated commodities for those holding other currencies. Gold has seen a decrease of about 14% this month, heading towards its largest drop since October 2008, driven by a strong U.S. dollar. However, prices have risen by about 5% so far this quarter. Traders have almost ruled out the chance of a U.S. Federal Reserve rate cut this year, as increasing energy prices present a risk of adding to overall inflation.

Before the conflict in the Middle East began, market participants expected two cuts in the Federal Reserve’s interest rates for this year. Benchmark oil prices continued to rise, nearing their largest monthly increase on record, as the conflict in the Middle East escalated, raising concerns over supply. On Monday, Fed Chair Jerome Powell remarked that the U.S. central bank is in a position to monitor the economic and inflationary effects of the Iran war, highlighting that policymakers often disregard disruptions such as those resulting from increasing oil prices.

U.S. President Donald Trump issued a strong warning that the United States would take action against Iran’s energy facilities and oil wells if Tehran does not reopen the Strait of Hormuz. This statement came after Tehran described U.S. peace proposals as “unrealistic” and carried out missile strikes on Israel. Spot silver rose by 1.2% to $70.81 per ounce, while spot platinum had a slight increase of 0.1% to $1,901.95, and palladium saw a gain of 1.1% to $1,421.45.