Gold prices held steady during a volatile Monday trading session, as a softer dollar was offset by a sharp rise in energy prices that fueled inflation concerns and further reduced expectations for U.S. interest rate cuts this year.
Spot gold edged down 0.1% to $4,488.46 per ounce by 0431 GMT, after swinging between a drop of more than 1% and a modest gain earlier in the session. U.S. gold futures for April delivery also dipped 0.1% to $4,518.30.
The U.S. dollar eased slightly, making gold and other dollar-priced commodities more affordable for buyers using other currencies.
One analyst noted that gold’s performance last week—when it snapped a three-week losing streak—suggested a reaction to oversold conditions and a possible reversal of recent declines. However, they added that this would need to be confirmed by price action in the coming days. Given the rapid pace of headline news, volatility is to be expected.
Brent crude surged above $115 a barrel after Yemeni Houthi forces launched attacks on Israel over the weekend, widening the ongoing conflict and adding to inflation pressures. The contract is on track for a 60% gain in March, which would mark its largest monthly rise on record.
Meanwhile, U.S. President Donald Trump said the United States and Iran have been meeting both directly and indirectly, describing Iran’s new leadership as “very reasonable.” These comments came as additional U.S. troops arrived in the region, with Tehran warning that it would not accept humiliation.
Traders now see little chance of a U.S. rate cut this year, as rising energy prices threaten to feed into broader inflation and limit the scope for monetary easing. This marks a sharp shift from earlier expectations of two rate cuts before the current conflict began.
Although inflation typically boosts gold’s appeal as a hedge, higher interest rates tend to weigh on demand for the non-yielding metal.
Gold has fallen more than 15% so far this month, putting it on track for its steepest monthly decline since October 2008. The drop has been driven largely by a stronger U.S. dollar, which has gained more than 2% since the U.S.-Israeli conflict with Iran began on February 28.
One market strategist explained that the broader macro picture behind gold’s underperformance lies in the significant shift in interest rate expectations, with the dollar strengthening as a result.
In other precious metals, spot silver rose 0.5% to $69.91 per ounce, spot platinum gained 2.7% to $1,911.05, and palladium climbed 2.9% to $1,416.60.
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