Gold prices declined on Monday as a sharp rally in crude oil intensified inflation concerns and pushed back expectations of US Federal Reserve rate cuts, dampening sentiment for the yellow metal.
Spot gold fell 0.6 percent to $4,466.99 per ounce, while US gold futures for April delivery slipped 0.6 percent to $4,496.30. The decline comes amid a broader shift in global macro trends, with rising energy prices strengthening the dollar and weighing on bullion.
A surge in crude oil prices has emerged as a key trigger for gold’s weakness. Brent crude climbed above $115 a barrel after fresh attacks by Yemen’s Houthi rebels on Israel, escalating tensions in West Asia and fuelling fears of prolonged supply disruption.
Crude prices have jumped nearly 60 percent in March, marking a record monthly surge. The spike has raised concerns that inflation could remain elevated, reducing the likelihood of monetary easing by the US Federal Reserve.
Markets, which had earlier expected two rate cuts this year, are now pricing in little chance of any easing as higher energy costs threaten to keep price pressures intact.
The shift in rate expectations has supported the US dollar, which has gained over 2 percent since the outbreak of the US-Israel conflict with Iran in late February. A stronger dollar typically makes gold more expensive for other currency holders, reducing demand.
Gold, which does not offer interest income, tends to lose appeal in a high interest rate environment, further adding to the downside pressure.
Gold has fallen more than 15 percent so far in March, marking its steepest monthly drop since the global financial crisis in 2008. The decline reflects a rapid repricing of interest rate expectations and changing investor positioning.
Despite the recent fall, analysts point out that gold may see intermittent support due to geopolitical risks and safe-haven demand, especially if tensions escalate further.
Market participants expect continued volatility in gold prices in the near term, driven by rapid developments in geopolitics, energy markets, and central bank signals.
