Gold Prices Hit One-Week Low on Inflation Pressures

Gold prices fell to a one-week low on Monday amid renewed inflation pressures and escalating U.S.-Iran tensions, challenging the metal's traditional role as a safe-haven asset. Spot gold dropped 0.3 percent to $4,818.03 per ounce by mid-morning in New York, while June U.S. gold futures declined 0.8 percent to settle at $4,839.10. The downturn occurred despite a surge in oil prices, which rose about 5 percent following the U.S. seizure of an Iranian cargo ship and threats of retaliation from Tehran, freezing much of the traffic through the Strait of Hormuz.

The decline reflects a complex interplay of economic forces. U.S. consumer prices rose at the fastest pace in nearly two years, reaching 3.3 percent in March, driven by a global energy shock linked to the Iran conflict. While inflation typically bolsters gold's appeal as a hedge against eroding currency value, higher energy costs have fueled expectations of sustained price pressures, potentially delaying Federal Reserve rate cuts. Borrowing costs remain elevated after multiple reductions late last year, with the central bank holding rates steady into 2026. As a non-yielding asset, gold becomes less attractive when Treasury...