Gold prices fell below $4,700 an ounce on Monday, retreating from recent gains as rising oil prices, a stronger U.S. dollar and mounting inflation concerns reshaped investor sentiment amid faltering U.S.-Iran peace efforts.
Spot gold dropped about 1.2% to roughly $4,657.89 an ounce, while U.S. gold futures also declined, as markets reacted to President Donald Trump’s rejection of Iran’s latest peace response, prolonging uncertainty around the 10-week Middle East conflict and sustaining pressure on global energy markets.
The decline highlights a notable shift in how markets are currently interpreting geopolitical risk. While gold is traditionally viewed as a safe-haven asset during global instability, investors are increasingly focusing on the inflationary consequences of elevated oil prices rather than purely defensive positioning.
With Brent crude surging above $105 per barrel amid continued disruptions around the Strait of Hormuz, concerns are growing that sustained energy price increases could keep inflation higher for longer, potentially forcing central banks to maintain tighter monetary policy.
Higher interest rate expectations typically weigh on gold because the metal offers no yield, making interest-bearing assets relatively more attractive.
The U.S. dollar also strengthened, adding further pressure by making dollar-priced gold more expensive for holders of other currencies. Strong U.S. labour market data has also reinforced expectations that the Federal Reserve may delay deeper rate cuts, further dampening bullion demand.
Despite Monday’s decline, gold remains sharply higher than a year ago, reflecting how broader macroeconomic uncertainty, central bank buying and reserve diversification trends have continued to support long-term demand.
The latest selloff suggests that in the current environment, gold is being driven less by traditional war-risk sentiment alone and more by the complex interaction between oil, inflation, interest rates and currency strength.
