Dollar Strength and Profit-Taking Send Gold Prices Lower

Gold prices fell on Monday as investors took profits after last week's rally and a stronger US dollar made gold more expensive for holders of other currencies. Spot gold dropped 0.6% to $4,351.12 per ounce by 0903 GMT.

The dollar's gain added pressure on gold, while some profit-taking was also at play, according to ActivTrades Director and CEO Ricardo Evangelista.

Gold had climbed to a one-week high of $4,399.41 per ounce on Friday as lower oil prices eased concerns about prolonged inflationary pressures. However, oil prices slid further on Monday, with investors hoping for diplomatic progress on the Iran war ahead of this week's UN meeting.

Concerns remain elevated due to ongoing tensions between Iran and the US, which exchanged new threats over the weekend. President Donald Trump warned that Iran would fail economically or face its leadership being wiped out if it didn't make a deal, while the Iranian military said it would retaliate harshly to any fresh attack.

Persistent inflation and further monetary tightening could create downside pressure towards $4,000 for gold, Evangelista cautioned. On the other hand, a de-escalation in the US-Iran war could ease inflationary fears, leading to lower yields and a softer dollar, which could allow gold to approach the $5,000 level.