Gold prices fell on Monday after new harsh statements by US President Donald Trump regarding Iran. The market is reacting to rising oil prices, a stronger dollar, and fears that escalation in the Middle East could increase inflationary pressure, Bloomberg reports, according to UNN.
Details
At the start of trading, the price of gold fell by 1.4%, and then traded around $4637 per ounce. At the same time, other precious metals also became cheaper: silver, platinum, and palladium, while the US dollar index showed growth.
Why gold went down
Trump previously threatened Iran with new strikes on energy and other infrastructure if Tehran does not open the Strait of Hormuz. Against this background, oil went up again, and investors began to revise expectations regarding inflation and future rate cuts in the US.
This is what is putting pressure on gold. When oil prices and inflation risks rise, the market more often expects high rates to be maintained longer, which is usually bad for gold, which does not yield interest income.
What else is putting pressure on the market
An additional factor was that some investors began to close positions in gold to cover losses in other assets. Amid military instability and strong movements in the energy market, gold is temporarily losing some of its traditional role as a "safe haven."