Gold Falls on Rising Interest Rates and Middle East Tensions

Gold prices fell in early Asian trading on Monday as tensions in the Middle East and rising interest rates weighed on the market. Spot gold dropped by 0.2% to $4,368.33 per ounce, while US gold futures for December delivery decreased by 0.4% to $4,406.70.

The latest violence between Yemen's Houthis and Saudi Arabia added to inflation concerns and reinforced expectations of higher interest rates. The prospect of a new global interest rate-tightening cycle is emerging as central banks around the world raise rates to combat inflation.

Although gold is often seen as an inflation hedge, rising rates tend to curb its demand by making interest-bearing assets more attractive. Gold demand in India remained subdued last week due to buyer caution, while premiums in China stayed steady supported by robust investment demand.