Gold falls over 1% as strong dollar, waning rate-cut expections
What's the story
Gold prices witnessed another drop on Monday, falling over 1% due to a stronger US dollar and waning expectations of interest rate cuts by the Federal Reserve. Spot gold fell 1.2% to $4,620.68 per ounce while US gold futures for April delivery lost 0.7% to $4,647.1. Spot silver declined 1% to $72.28 per ounce. The rise in the 10-year US Treasury yield and dollar index also weighed on greenback-priced bullion.
Market influence
Iran-Israel conflict pushes crude prices above $110 per barrel
The ongoing US-Israel conflict with Iran has kept oil prices above $110 per barrel, further complicating global energy supplies. This spike in crude prices has raised fears of rising inflation, which usually dampens demand for non-yielding assets like gold. Chicago Federal Reserve President Austan Goolsbee expressed concern over the timing of an oil shock pushing up prices before last year's tariff-induced inflation had a chance to subside.
Demand shift
Traders rule out Federal Reserve rate cut this year
Traders have almost completely ruled out any chances of a Federal Reserve rate cut this year, contrary to earlier expectations of two reductions before the Iran war began. Despite these changes, COMEX gold speculators increased their net long positions by 1,098 contracts to 93,872 in the week ending March 31. In India last week, gold traded at a premium for the first time in two months as softer prices boosted demand for the metal.