Gold Price Tumbles to Seven-Week Low Amid Fading Middle East Hopes
Gold prices plummeted to a seven-week low on Monday, closing at $4,114.93 per ounce after a 4% decline.
The sharp drop was attributed to fading expectations for the reopening of the Strait of Hormuz and de-escalation of the Middle East conflict following US President Trump's rejection of Iran's peace proposal.
Under normal circumstances, heightened geopolitical risks would drive capital inflows into gold. However, persistently rising oil prices have instead brought fresh pressure to the market, as investors worry about inflation and potential rate hikes by the Federal Reserve.
The impact of rising interest rates tends to be more direct in short-term trading, which has contributed to gold's decline alongside gains in the US dollar and U.S. Treasury yields.