Gold fell more than 2% on Monday, as a stronger dollar weighed on greenback-priced bullion, while higher energy costs fuelled inflation concerns and further dimmed the prospects for near-term reductions in interest rates.
Spot gold was down 2.5% at $5,041.89 per ounce, as of 0048 GMT. U.S. gold futures for April delivery were down 2.1% at $5,049.40.
The dollar hovered near a three-month high hit last week, making bullion more expensive for holders of other currencies.
The U.S. 10-year Treasury yields climbed to a near one-month high, raising the opportunity cost of holding non-yielding gold.
Oil-driven inflation fears and delayed rate-cut expectations likely strengthened U.S. yields and the dollar, outweighing safe-haven demand and pushing gold down.
Raising geopolitical tensions in the Middle East, Iran on Monday named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, signalling that hardliners remain firmly in charge.
Crude oil prices rose sharply to over $100 per barrel amid fears of tighter supply and prolonged disruptions to oil shipments through the Strait of Hormuz.
Investors expect the U.S. Federal Reserve to keep interest rates steady at the end of its two-day meeting on March 18, as per CME Group’s FedWatch tool. The odds of a June hold, which were below 43% last week, climbed to more than 51%.
Share futures slid in Asia on Monday as the inflationary pulse from surging oil prices threatened to raise living costs, and perhaps interest rates, across the globe.
Meanwhile, data on Friday showed that U.S. nonfarm payrolls decreased by 92,000 jobs last month, compared with economists’ expectations for a 59,000 climb, while the unemployment rate rose to 4.4%.
Spot silver dropped 4% to $80.99 per ounce. Spot platinum fell 3.8% to $2,054.65, and palladium was down 2.1% at $1,590.32.
