Gold Trades Lower Below $4,700 As Fed, Iran Risks Persist

Gold prices traded lower on Monday and remained below the $4,700 mark as investors continued to assess geopolitical tensions in the Middle East alongside expectations of prolonged tight monetary policy by the Federal Reserve System.

The precious metal declined by 0.5 per cent to trade at $4,690 per ounce at the London market, according to Reuters, extending recent losses recorded in the commodity market.

Market analysts attributed the decline to renewed strength in the U.S. dollar, supported by expectations that the Federal Reserve could maintain a hawkish monetary stance for longer amid persistent inflation concerns.

A stronger dollar typically weighs on gold prices by making the commodity more expensive for holders of other currencies and reducing demand for safe-haven assets.

Despite the latest decline, analysts cautioned against concluding that gold’s recent recovery has fully lost momentum, noting that the absence of aggressive selling pressure suggests investors remain cautious amid ongoing geopolitical uncertainties.

Gold had recently rebounded from the $4,500 psychological level after touching a more than one-month low last week.

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The latest market movement comes as hopes for a peace agreement between the United States and Iran weakened following renewed hostilities around the Strait of Hormuz.

Tensions in the region escalated after U.S. President Donald Trump and Iranian authorities rejected each other’s peace proposals regarding the ongoing conflict and negotiations surrounding Iran’s nuclear programme.

The renewed uncertainty surrounding the conflict has kept investors focused on geopolitical developments, particularly because of the strategic importance of the Strait of Hormuz to global energy markets.

Federal Reserve officials have maintained a cautious approach toward interest rate adjustments amid concerns that inflationary pressures could remain elevated longer than previously anticipated.

Higher interest rates generally reduce the appeal of non-yielding assets such as gold because investors tend to favour interest-bearing securities during periods of monetary tightening.

Investors are also assessing broader global economic conditions, including inflation trends, bond yields, currency market movements, and geopolitical risks affecting commodity markets.

The recent movement in gold prices reflects continued volatility across global financial markets as traders respond to shifting expectations surrounding monetary policy and geopolitical developments.

The commodity has historically attracted increased demand during periods of economic uncertainty, geopolitical instability, and financial market volatility.

However, sustained dollar strength and rising Treasury yields could continue to limit upward momentum in the gold market despite ongoing safe-haven demand.

Investors are expected to remain cautious in the near term as markets continue to evaluate the combined impact of geopolitical risks and central bank policy expectations on global commodity prices.