Precious metals retreated sharply on Monday, with spot gold sliding 3.3% to reach a seven-week low of $4,146.51 per ounce. The decline was driven by a strengthening US dollar, rising Treasury yields, and escalating oil prices stemming from ongoing tensions between the United States and Iran.
Silver mirrored gold’s drop, falling nearly 5% to $61.27 per ounce. Platinum and palladium also saw significant losses, dropping 2.9% to $1,726.30 and 4.4% to $1,211.45, respectively. US gold futures followed the same downward trajectory, settling at $4,178.40.
The downward pressure on gold stems from a combination of macroeconomic factors. While the metal is traditionally viewed as a hedge against inflation, the current environment features rising interest rates that make yield-bearing assets more attractive. The Federal Reserve raised its benchmark rate by a quarter percentage point earlier this month, signaling that additional hikes are likely in the coming months. Cleveland Fed President Beth Hammack recently reinforced this outlook, warning that inflation risks remain elevated.
Compounding the issue, oil prices spiked approximately 3% after President Donald Trump rejected an Iranian proposal to de-escalate the conflict and reopen the Strait of Hormuz. The stronger dollar, trading near a two-month high, further discouraged investment in dollar-denominated commodities like gold.
Jim Wyckoff, a market analyst at the American Gold Exchange, described the convergence of these economic forces as a “perfect storm” pushing metals prices lower. Sherif Othman, CEO of Maryland-based Poise Investment Advisors, noted that while average consumers might not feel immediate effects, investors holding gold would suffer losses due to the metal’s lack of interest yield.
This marks the lowest valuation for gold since August 5, reflecting the growing headwinds facing the precious metals sector amidst global geopolitical and monetary policy shifts.
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