Gold Prices Fall on US Strait of Hormuz Blockade

Gold prices fell sharply on Monday, reaching their lowest level since April 7, as the United States announced a naval blockade of the Strait of Hormuz following the collapse of peace talks with Iran. The move heightened fears of escalating conflict in the Middle East, driving up oil prices and inflation expectations while diminishing prospects for Federal Reserve interest rate cuts.

Spot gold declined as much as 2.2 percent, briefly dipping below 4,650 U.S. dollars per ounce before recovering slightly to trade around 4,730 dollars per ounce in early Asian sessions. U.S. gold futures for June delivery fell about 1 percent to 4,742 dollars per ounce. The precious metal has lost more than 10 percent of its value since the U.S.-Israeli war with Iran began on February 28, after peaking near 5,500 dollars per ounce in January.

The blockade, set to begin at 10 a.m. Eastern Time, targets all maritime traffic entering and exiting Iranian ports and coastal areas, including the strategic Strait of Hormuz. President Donald Trump authorized the action after weekend negotiations in Pakistan between U.S. and Iranian representatives ended without agreement. The talks, aimed at converting a...