Gold prices fell at the start of Asian trading on Monday, affected by escalating military tensions in the Gulf region and rising oil prices.
This reinforced expectations that the U.S. will maintain its tight monetary policy to counter inflationary pressures.
The spot price of gold fell by 1.53% to $4,057.02 per ounce.
Meanwhile, U.S. gold futures for August delivery fell by 1.2% to $4,064.50 per ounce.
This decline came after the military standoff between the United States and Iran escalated over the weekend.
The region witnessed mutual attacks involving missiles and drones.
Tehran also announced once again the closure of the Strait of Hormuz, one of the world’s most important maritime corridors for oil transport.
This led to a sharp jump in crude oil prices and a rise in the dollar, coinciding with a decline in a number of Asian markets.
Investors are keeping a close eye on a series of important economic events this week.
Most notably, Federal Reserve Chair Kevin Warsh’s semiannual testimony before Congress, as well as the release of the Consumer Price Index,
Also on the agenda are the Producer Price Index and June retail sales figures, which could determine the direction of monetary policy in the coming months.
In its latest report, the Federal Reserve noted that inflation in the United States rose during the spring, driven by the impact of tariffs.
This was compounded by rising energy costs resulting from the war, as well as a significant surge in investments related to artificial intelligence.
In Asian markets, India saw gold trading at significant discounts due to price volatility.
Meanwhile, demand remained stable in China, supported by the People’s Bank of China’s continued increase in its gold reserves, which recorded the largest monthly increase in more than two and a half years.
Other precious metals also recorded across-the-board declines, with silver falling by 2.88%.
Platinum fell by 1.97%, while palladium declined by 2.25%, amid continued caution in global markets.
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