Gold prices still defy expectations of a safe-haven surge, trading at $5,128.70 per troy ounce on Monday, down 0.59% from the previous day, despite escalating Middle East tensions.
The conflict, now in its second week, has disrupted shipping in the Strait of Hormuz, forcing several producers, including Kuwait, Iraq, and the UAE, to curtail crude output.
These developments threatened roughly 20% of global crude and natural gas supply, prompting market watchers to anticipate a windfall for gold as investors sought shelter from geopolitical risk.
Despite these pressures, gold gains were limited by a firmer US dollar and dwindling expectations for immediate Federal Reserve interest rate cuts. The dollar’s strength against major currencies made gold more expensive for overseas buyers, curbing demand despite the safe-haven appeal.
Over the past month, gold has risen 2.09%, reflecting broader inflation and geopolitical concerns, while year-on-year, the metal remains up 77.81%, highlighting its long-term value as a hedge.
Meanwhile, crude oil prices surged past $110 per barrel, the highest since 2022, driven by supply disruptions and fears of renewed global inflation. Rising energy costs complicate the Federal Reserve’s policy outlook, reinforcing the strength of the US dollar and further limiting gold’s near-term upside.
Investors are now balancing gold’s role as an inflation hedge against the appeal of the dollar amid global uncertainty. The divergence between soaring oil prices and softer gold performance underscores the complex interplay of geopolitical risk, currency strength, and monetary policy expectations in the commodities markets.
Despite the ongoing conflict, gold has yet to deliver the anticipated windfall, showing how strong dollar demand and broader market dynamics can offset traditional safe-haven flows.
