Gold Dips Amid Middle East Tensions and Rate Outlook

Gold prices fell on Monday as investors focused on developments in the Middle East and their impact on inflation and interest rates. Spot gold declined by 0.3% to $4,362.60 per ounce, while US gold futures dropped 0.6% to $4,400.20.

The market's attention was centered on tensions between Iran and the United States, with President Donald Trump warning of severe economic consequences if Iran failed to make a deal. In response, the Iranian military vowed to retaliate harshly against any new attack.

Analysts point out that for gold to gain momentum, there needs to be a clear move lower in oil and bond yields. Currently, oil prices are falling due to hopes of diplomatic efforts in Iran, while central banks are raising interest rates to combat inflation fueled by the conflict.

Tim Waterer, chief market analyst at KCM Trade, noted that gold may trade in a range of $4,200 to $4,580 in the near term. Meanwhile, analysts at Standard Chartered believe structural drivers remain in place to lift prices, albeit at a slower pace.