Gold Declines 1.5% as Iran War Drives Oil Surge and Dollar Strength

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TLDR

  • Spot gold declined 1.5% to $5,096.51 per ounce on Monday, reaching a session low of $5,015.23 per ounce
  • An oil price surge—with Brent briefly approaching $120 per barrel—stoked inflation concerns, pressuring gold
  • The US dollar index climbed as much as 0.7%, weighing on precious metals
  • Gold remains above $5,000 per ounce and has gained roughly 18% year-to-date
  • Silver, platinum, and palladium all fell on Monday, though silver recouped most of its losses

Gold saw a steep retreat on Monday as the US-Israel conflict with Iran entered its 10th day, driving oil prices upward and boosting the dollar—two challenges that significantly impacted precious metals.

By mid-morning London time, spot gold decreased 1.5% to $5,096.51 per ounce. During the session’s low point, it dropped to $5,015.23 per ounce, narrowly avoiding a fall back below the $5,000 mark. Gold futures slipped 1.1% to $5,104.04 per ounce.

Micro Gold Futures,Apr-2026 (MGC=F)

The sell-off occurred as Brent crude jumped by up to 30%, at one stage approaching $120 per barrel, following weekend strikes on Iranian oil facilities by US and Israeli forces. Iran retaliated by attacking ships in the Strait of Hormuz, a channel responsible for approximately 20% of global oil supply.

This quickly turned investors’ attention to inflation—and its potential implications for interest rates.

Inflation Fears Put Fed Back in Focus

Elevated crude prices increase costs throughout the economy, potentially driving inflation upward. This, in turn, lowers the likelihood of Federal Reserve rate cuts—and may increase the probability of a rate hike. , which yields no interest, typically struggles when rates are expected to remain high or rise further.

The Bloomberg Dollar Spot Index climbed 0.3% on Monday, following a 1.3% increase the previous week. A stronger dollar makes gold costlier for international buyers, adding additional strain.

“During periods of market stress driven by geopolitical factors, investors occasionally sell assets like gold to generate cash,” said Christopher Wong, strategist at Oversea-Chinese Banking Corp. “Once this phase subsides, geopolitical uncertainty generally continues to support demand for safe-haven assets during price dips.”

This conflict—safe-haven demand pushing in one direction and rate concerns pulling in the other—has characterized gold’s volatile trading in recent weeks. The metal has fluctuated between $5,000 per ounce and a near-record high of around $5,600 per ounce, reached in late January.

Gold dropped approximately 2% last week. Friday’s weaker-than-anticipated US jobs report temporarily boosted expectations for rate cuts, though the oil price surge quickly overshadowed this.

Other Metals Also Under Pressure

Silver briefly fell below $80 per ounce before rebounding. It closed the session down 0.9% at $83.82 per ounce. Platinum declined 1.8%, and palladium dropped 1.7%. Copper futures slipped 0.7% to $12,781.0 per ton.

Despite Monday’s decline, gold remains up approximately 18% year-to-date. Central bank purchases have provided consistent support, with the People’s Bank of China buying gold for the 16th straight month in February.

Ed Meir, an analyst at Marex, stated in a note last Friday that a swift resolution to the conflict would likely weaken the dollar and boost gold, whereas a prolonged war would drive yields and the dollar higher due to inflation expectations. Brent crude was last trading with a gain of around 12.5% on the day.