Gold was under pressure on Monday as rising uncertainty over the geopolitical situation in the Middle East lifted oil prices and reignited inflation concerns.
Conditions deteriorated to a certain extent after the United States seized an Iranian cargo vessel, prompting retaliation threats from Tehran and casting doubt on the durability of the current ceasefire.
The surge in energy prices and inflation expectations supported both the US dollar and Treasury yields across maturities, weighing on bullion.
Investment flows are also at risk of reversing. After two weeks of inflows, gold-backed ETFs may face renewed outflows as investors could shift toward other assets amid rising yields, placing additional selling pressure on the precious metal.
Looking ahead, gold’s trajectory will remain closely tied to the developments in the Middle East and their impact on energy markets and inflation expectations. While ongoing central bank purchases and persistent tensions in Eastern Europe provide a longer-term floor, sustained strength in yields and the dollar could keep the metal under pressure in the near term.
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