Gold prices retreated during Monday's Asian session, slipping below the US$4,100 level as renewed Middle East tensions lifted the United States dollar and oil prices, while investors assessed fresh inflation warnings from the Federal Reserve.
By 4:00 pm AEST (6:00 am GMT), spot gold was down 1.4% at US$4,055.16 an ounce.
The decline followed another escalation in the conflict between the United States and Iran after Washington carried out additional strikes on Iranian targets on Sunday.
In response, Tehran launched attacks on U.S. facilities across several Gulf states and declared it had once again closed the strategically important Strait of Hormuz, raising concerns over global energy supplies.
Inflation concerns also intensified after the Federal Reserve highlighted mounting price pressures in its semi-annual Monetary Policy Report, released on Friday.
The report stated: “U.S. inflation ‘stepped up further this spring’ as the evolving impact of tariffs, a war-related rise in energy costs, and the booming artificial intelligence buildout boosted price pressures that took root last year.”
The stronger U.S. dollar, which rose around 0.2% as investors sought safety amid rising geopolitical risks, also weighed on bullion prices.
Gold traders are now looking ahead to the release of the U.S. consumer price index (CPI) on Tuesday, as well as new Federal Reserve Chair Kevin Warsh's first semi-annual testimony before Congress on the same day (Wednesday AEST), for further clues on the outlook for interest rates.
