Investors remain cautious as Iran-US tensions escalate and Federal Reserve signals continue to pressure bullion prices…..
Gold prices opened the week on a weaker note, slipping below the key $4,700 level as investors weighed renewed geopolitical uncertainty in the Middle East against expectations of tighter monetary policy from the United States Federal Reserve.
The precious metal declined by 0.5 percent to trade around $4,690 per ounce on the London market, pressured largely by a stronger US dollar, which continues to benefit from safe-haven demand and expectations that the Federal Reserve could maintain a hawkish stance on interest rates.
Market analysts say the dollar’s strength is limiting upside momentum for gold, as a firmer greenback typically makes bullion more expensive for international buyers and reduces its appeal compared to interest-bearing assets.
Despite the decline, traders remain cautious about calling a broader reversal in gold’s recent recovery, especially after prices rebounded strongly from the important $4,500 psychological level reached last week, a low not seen in more than a month.
The market is also closely monitoring fresh developments in the Middle East, where renewed tensions around the Strait of Hormuz have reignited concerns over global stability and energy supply disruptions.
Earlier optimism surrounding a possible peace agreement between the United States and Iran quickly faded after both sides rejected each other’s proposals aimed at ending hostilities and reopening strategic shipping routes in the region.
The conflict has continued to intensify amid deep disagreements over Iran’s nuclear programme, adding another layer of uncertainty to already fragile global financial markets.
Investors are now balancing two competing forces geopolitical risk, which traditionally supports gold prices, and expectations of prolonged higher US interest rates, which tend to weaken demand for non-yielding assets like bullion.
With tensions in the Gulf region showing little sign of easing and central banks remaining cautious on inflation, analysts expect volatility in the gold market to remain elevated in the coming days.
