On Monday, gold prices fell to their lowest point in more than a month, influenced by rising tensions in the Middle East that caused a surge in oil prices. This situation has intensified worries about inflation and reinforced expectations of sustained high interest rates. Spot gold fell by 1.1% to $4,488.99 per ounce, as of 0052, reaching its lowest level since March 30. U.S. gold futures for June delivery fell by 1.5%, closing at $4,493.30.

Gold experienced downward pressure as geopolitical tensions escalated after a drone strike caused a fire at a nuclear power facility in the United Arab Emirates. This incident led to rising crude prices and increased expectations surrounding interest rates. Saudi Arabia announced the interception of three drones, while U.S. President Donald Trump warned that Iran must act “quickly” in light of a perceived standstill in efforts to address the U.S.-Israeli conflict. Central banks usually raise interest rates when faced with inflation, leading to a decrease in the appeal of non-yielding bullion.

Oil prices continued to rise on Monday, hitting a two-week high. Markets are increasingly considering the possibility of a rate hike by the U.S. Federal Reserve before the year concludes, with a 50% chance of this adjustment happening by December, according to CME Group’s FedWatch tool. Investors are looking forward to the release of the minutes from the Fed’s April meeting this week, hoping to gain insights into the central bank’s monetary policy direction. India has implemented immediate restrictions on silver imports in nearly all forms, according to a government directive issued on Saturday.

This action is taken as the top worldwide consumer of silver seeks to manage shipments and ease the strain on the rupee. Last week, gold discounts in India reached an all-time high, while investment demand in China continued to command strong premiums. Gold speculators raised their net long positions by 4,963 contracts, resulting in a total of 100,627 for the week ending May 12. Spot silver fell by 2.2% to $74.30 per ounce, platinum dropped 0.6% to $1,961.30, and palladium decreased by 1.2% to $1,396.25.