Gold prices declined on Monday as a stronger U.S. dollar and rising Treasury yields reduced the appeal of the precious metal despite ongoing geopolitical tensions in the Middle East.
Spot gold fell 0.8 percent to about $5,130.94 per ounce, while U.S. gold futures for April delivery dropped 0.4 percent to around $5,138.20 per ounce.
The decline comes as the U.S. dollar strengthened to a three-month high, making dollar-denominated assets such as gold more expensive for investors holding other currencies.
Stronger Dollar Weighs on Gold
A stronger dollar typically pressures gold because the precious metal is priced in U.S. currency in global markets.
As the dollar rises, gold becomes more costly for international buyers, which tends to reduce demand and weigh on prices.
At the same time, U.S. 10-year Treasury yields climbed to a one-month high, further reducing gold’s attractiveness since bullion does not generate interest or yield income like bonds.
Investors often shift funds from gold to interest-bearing assets when bond yields rise.
Oil Shock Alters Interest Rate Expectations
Another factor influencing gold prices is the sharp surge in oil prices following escalating tensions in the Middle East.
Global oil prices have surged more than 25 percent, fueling concerns about rising inflation across major economies.
Higher inflation driven by energy prices could force central banks to keep interest rates elevated for longer.
As a result, expectations for U.S. Federal Reserve rate cuts have weakened.
Market expectations for a rate cut at the Fed’s March meeting have dropped significantly, with analysts now expecting the central bank to maintain current interest rates.
Other Precious Metals
Movements in other precious metals were mixed.
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Silver held around $84.42 per ounce
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Platinum slipped slightly to $2,133.95 per ounce
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Palladium declined 0.9 percent to about $1,610 per ounce
These metals also tend to react to movements in the dollar and global industrial demand.
Outlook for Gold
Despite the current pullback, analysts remain broadly bullish on gold over the longer term due to persistent geopolitical tensions, central bank demand and global economic uncertainty.
Several investment banks have projected gold prices could approach $6,000 per ounce or higher in 2026 if geopolitical risks and global debt levels continue to rise.
For now, however, short-term price movements are likely to remain closely tied to the strength of the U.S. dollar, Treasury yields and expectations surrounding Federal Reserve monetary policy.