XAU/USD falls amid Middle East tensions and rising crude oil prices fueling inflation concerns and higher rate expectations.
Gold prices dropped to $4,535 in early Asian trading Monday, pressured by heightened inflation fears linked to Middle East conflict and surging crude oil. The decline reflects growing expectations for a Federal Reserve rate hike, as traders price out cuts for this year according to CME’s FedWatch Tool.
The precious metal, typically a safe-haven asset, struggles when interest rates rise as it offers no yield. Recent geopolitical tensions, including U.S. demands on Iran and stalled trade talks with China, have further weighed on sentiment. Analysts note that rising oil prices reinforce inflationary pressures, reducing gold’s appeal.
Market reaction has been muted, with focus shifting to upcoming economic data and Fed commentary for further direction.