Gold Prices Retreat Amid US Dollar Strength and Iran Uncertainty

Gold prices have retreated slightly on Monday as investors weigh the uncertainty surrounding Iran's demands to reopen the Strait of Hormuz and the outlook for Federal Reserve interest rates. The US dollar has strengthened, which can make gold more expensive for overseas buyers.

The Strait of Hormuz is a vital waterway used by 20% of the world's oil and liquefied natural gas flows. Iran has effectively blocked it since late February, pushing up energy prices and threatening the global economy. The US is under pressure to reopen the Strait, but President Donald Trump argues that economic sanctions will eventually bring Iran to the negotiating table.

Analysts are watching for upcoming inflation data, which could influence Fed rate decisions and in turn affect gold prices. A lower interest-rate environment tends to support gold because it reduces the opportunity cost of holding the non-yielding asset.