Spot gold retreated 0.1% to $4,100.32 per ounce as markets digested the immediate financial fallout from renewed US military strikes on Iran.
The precious metal’s decline underscores a complex shift in risk sentiment, where traditional safe-haven demand is being offset by broader macroeconomic pressures stemming from the geopolitical shock.
The primary driver behind gold’s weakness is the simultaneous surge in oil prices and the US dollar.
As energy costs spike due to supply disruption fears, inflation expectations are rising, prompting traders to increase bets on further Federal Reserve rate hikes.
A stronger dollar and higher real yields create a headwind for non-yielding assets like gold, even as geopolitical uncertainty typically supports it.
This dynamic marks a continuation of the volatility seen in recent sessions.