Gold prices end lower as investors, rattled by Iran conflict, continue to shelter in the dollar

By Myra P. Saefong and Barbara Kollmeyer

Gold futures' decline follows last week's 1.7% loss

Gold is no match for the dollar as the Iran conflict rages on.

Gold prices declined on Monday, extending their loss from last week, as an escalating conflict with Iran drove fears of sticky inflation on the back of surging prices of oil, and investors again took shelter in the dollar.

"Gold tends to struggle when the dollar becomes the preferred 'fear trade,'" said Adam Koos, president and portfolio manager at Libertas Wealth Management Group.

That fear has come on the back of a rise in oil prices, which touched highs above $100 a barrel on Monday to reach levels not seen since 2022. Oil pared much of its gains Monday, however, as traders weighed growing concerns of a lasting supply shock against news that the Group of Seven is considering a coordinated emergency release of crude reserves.

"When global capital is looking for safety, the U.S. dollar and Treasurys often win that tug-of-war because they offer liquidity and yield" - two things gold simply can't compete with, Koos told MarketWatch.

"So when the dollar strengthens, gold usually moves the other direction, or at the very least, chops sideways," he said.

April gold (GC00) (GCJ26) fell $55, or 1.1%, to settle at $5,103.70 an ounce on Comex, after rising 1.6% on Friday, but it lost 1.7% overall last week. That marked the biggest one-week percentage decline since the week ending Jan. 30. Silver prices (SI00) fell 21 cents, or 0.3%, to $84.52 an ounce. Silver lost nearly 10% last week, also marking its worst week since Jan. 30.

Investors were flocking to the dollar, with the ICE Dollar Index DXY up 0.2% to 99.137. That came as the Dow Jones Industrial Average DJIA traded down nearly 500 points. Bonds were mixed, with the yield on the 10-year Treasury note BX:TMUBMUSD10Y down to 4.129% from 4.131% Friday, and the yield on the 2-year Treasury note BX:TMUBMUSD02Y up to 3.586% from 3.554% Friday.

Gold has been moving lower on the belief that soaring oil prices will weigh on inflation and reduce chances of interest-rate cuts from the Federal Reserve, strategists at Saxo Bank said. As gold offers no yield, it is less attractive than yield-bearing assets if interest rates stay higher.

However, Saxo said this view may be "misplaced as the current price surge reflects a supply shock, not stronger demand, raising the risk of stagflation that could ultimately force central banks to provide economic support." It added: "In the short term, deleveraging and a stronger dollar may weigh on prices without removing the underlying reasons investors have increasingly been flocking to hard assets in recent years."

Rania Gule, senior market analyst at multiasset broker XS.com, told clients that gold remains supported by stubbornly high global debt, geopolitical volatility and central-bank demand. Therefore, any downward price correction could be a chance to buy, especially if the precious metal nears $4,995 to $5,000 an ounce, the analyst said.

Analysts have also been discussing reports that gold flows are being disrupted by the conflict, with the precious metal reportedly selling at a deep discount in Dubai, as planes are unable to take off in the important trading hub.

-Myra P. Saefong -Barbara Kollmeyer

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03-09-26 1415ET