Gold prices retreated on Monday as investors weighed the conflicting signals from escalating geopolitical tensions and shifting monetary policy expectations.
The precious metal faced selling pressure despite a fresh round of military strikes by Iran on US military sites in Bahrain and Kuwait, which typically would support safe-haven demand.
The primary drag on gold came from the bond market, where traders increased bets on Federal Reserve rate hikes.
Higher interest rates reduce the opportunity cost of holding non-yielding assets like gold, while simultaneously bolstering the US dollar.
A stronger dollar makes gold more expensive for holders of other currencies, further dampening demand.
In contrast, energy markets reacted sharply to the direct supply risk.