Gold prices fell by more than 1% on Monday, driven by a strong dollar and decreasing hopes for possible interest rate cuts by the U.S. Federal Reserve. Spot gold fell by 1.2%, settling at $4,620.68 per ounce as of 0047. Gold futures in the U.S. for April delivery fell by 0.7% to $4,647.10. The rise in the 10-year U.S. Treasury yield and the dollar index put pressure on bullion priced in dollars.
U.S. President Donald Trump delivered a strong message to Tehran, indicating that there would be serious repercussions if the Strait of Hormuz, an essential route for global oil transport, was not reopened by Tuesday. Recent U.S. intelligence assessments indicate that Iran is not expected to reopen the strait in the near future, according to sources. Oil prices began the week on a strong note, holding steady above $110 per barrel, as the ongoing conflict involving the U.S. and Israel against Iran continues to affect global energy supplies. The rise in crude prices has heightened concerns about increasing inflation. Gold has historically been seen as a protection against inflation; nonetheless, elevated interest rates generally dampen the appetite for this asset that does not generate income.
On Thursday, Chicago Federal Reserve President Austan Goolsbee stated that the timing of the current oil shock, which is causing prices to rise, is unfortunate, especially as the inflation from last year’s tariff shocks has yet to subside. He expressed that this situation is worrisome. Meanwhile, data indicated that nonfarm payrolls rose by 178,000 jobs in March, marking the highest increase since December 2024, while the unemployment rate declined to 4.3%. Market participants have mostly ruled out the chance of a Federal Reserve rate reduction happening this year. Before the start of the Iran conflict, there were expectations of two reductions happening this year. Gold speculators on COMEX increased their net long positions by 1,098 contracts, resulting in a total of 93,872 for the week ending March 31.
Gold saw a premium in India last week for the first time in two months, influenced by lower prices that boosted demand for the metal. Conversely, premiums in China experienced a minor decrease as purchasers expected a more substantial adjustment. Spot silver fell by 1% to $72.28 per ounce, spot platinum dropped by 0.5% to $1,979.42, while palladium saw a minor rise of 0.1% to $1,504.34.