Why safe haven gold is not rising during global uncertainty
What's the story
Gold and silver prices fell on Monday amid weakness in the global commodity markets. The fall was mainly due to rising bond yields, a stronger US dollar, and increased geopolitical uncertainty. COMEX gold fell by 0.96% to $4,449.40 per ounce while COMEX silver dropped 1.24% to $68.93 per ounce during the session with prices fluctuating between $69.54 and $67.70 an ounce.
Market response
Oil spikes, analysts cite macro drivers
The decline in gold and silver prices comes amid rising tensions in West Asia, which have pushed oil prices sharply higher. This has raised concerns about a broader inflation shock. Normally, such geopolitical risks would boost safe-haven assets like gold. However, analysts say that macroeconomic factors are currently driving price movements more than these geopolitical developments.
Market pressures
Rising expectations of higher interest rates have weighed on gold
Manav Modi, a commodities analyst at Motilal Oswal Financial Services, said that gold is being pressured by a stronger dollar and mixed signals around potential US-Iran negotiations. He also noted that rising expectations of higher interest rates due to energy-led inflation risks have weighed on gold. This is because it increases the opportunity cost of holding non-yielding assets like gold.
Market factors
Maxwell cites dollar strength and profit-taking
Ross Maxwell, Global Strategy Operations Lead at VT Markets also pointed out that a stronger US dollar—backed by safe-haven flows and the country's status as a net energy exporter—has made dollar-denominated commodities more expensive for global buyers. This has further pressured prices. Additionally, profit booking after recent rallies and concerns over global economic growth have contributed to the decline, especially for silver which is heavily exposed to industrial demand.