BY COMFORT OGBONNA
Gold prices moved lower on Monday as a stronger U.S. dollar and rising oil prices reduced investor demand for the precious metal. Persistent geopolitical tensions involving Iran, combined with stronger-than-expected employment data from the United States, have also dampened hopes that the Federal Reserve will cut interest rates in the near term.
Spot gold declined about 0.5%, trading near $4,652.89 per ounce in early trading. Meanwhile, U.S. gold futures for April delivery remained relatively steady around $4,678.70 per ounce. Market activity was somewhat subdued as several financial markets across Asia and Europe were closed for a public holiday, resulting in thinner trading volumes.
The decline in gold prices comes as the U.S. dollar strengthened against major global currencies. A stronger dollar typically puts pressure on gold because the precious metal is priced in the U.S. currency, making it more expensive for investors holding other currencies. As a result, demand for gold often weakens when the dollar gains momentum.
Fresh economic data from the United States also contributed to the pressure on gold. The latest employment report showed that U.S. job growth accelerated in March, with nonfarm payrolls increasing by 178,000 jobs. The figure marked the strongest monthly employment gain since December 2024, highlighting continued resilience in the U.S. labor market.
At the same time, the unemployment rate fell to 4.3%, indicating that labor market conditions remain relatively tight despite concerns about economic uncertainty. Strong labor data tends to reinforce expectations that the Federal Reserve will maintain higher interest rates for longer in order to control inflation.
Following the release of the jobs report, yields on the benchmark U.S. 10-Year Treasury rose, while the U.S. Dollar Index gained ground. Higher bond yields increase the opportunity cost of holding non-yielding assets such as gold, often leading investors to shift funds toward interest-bearing investments.
In energy markets, oil prices climbed further as geopolitical tensions in the Middle East continued to disrupt global supply chains. Prices for Brent crude rose amid concerns that the ongoing conflict involving the United States, Israel, and Iran could affect oil shipments through key transit routes.
The escalation in tensions has added to uncertainty in global markets. Donald Trump warned that Iran could face severe consequences if it fails to reach an agreement and reopen the strategic Strait of Hormuz by Tuesday. The narrow waterway serves as one of the most critical energy shipping routes in the world, and any disruption there could have significant implications for global oil supply.
Recent intelligence assessments from the United States suggest that Iran may be unwilling or unable to reopen the passage in the near future. That outlook has intensified concerns that the conflict could prolong disruptions to oil shipments and keep energy prices elevated for an extended period.
Rising crude prices have increased fears that inflation could remain stubbornly high. Although gold is traditionally considered a hedge against inflation, the metal tends to struggle when interest rates remain elevated. Higher borrowing costs reduce the appeal of assets like gold that do not generate income.
Tim Waterer, chief market analyst at KCM Trade, said the combination of strong economic data and rising oil-driven inflation concerns has limited gold’s ability to benefit from its traditional role as a safe-haven asset.
According to Waterer, the strong nonfarm payrolls report has reinforced a more cautious stance among central bankers, while concerns about inflation fueled by higher energy prices have overshadowed gold’s typical safe-haven appeal during periods of geopolitical stress.
Market expectations for monetary policy have also shifted significantly in recent weeks. Before the outbreak of the conflict involving Iran, many investors anticipated that the Federal Reserve could deliver at least two interest-rate cuts during the year. However, those expectations have largely disappeared as economic data continues to show resilience and inflation risks remain elevated.
Traders in interest-rate futures markets have now almost completely priced out the possibility of rate cuts this year. The shift reflects a growing belief that the Federal Reserve will keep borrowing costs higher for longer to ensure that inflation is brought under control.
In futures markets, positioning data indicates that investors remain broadly bullish on gold despite the recent pullback. Speculators trading on COMEX increased their net long positions in gold by 1,098 contracts, bringing the total to 93,872 contracts in the week ending March 31.
Other precious metals also experienced mixed movements during the session. Spot Silver dropped about 0.9% to $72.34 per ounce, reflecting similar pressure from the stronger dollar and rising bond yields.
Spot Platinum declined roughly 0.6%, trading around $1,977.29 per ounce, while Palladium edged slightly higher, gaining about 0.3% to reach approximately $1,500.25 per ounce.
Overall, gold markets remain caught between competing forces. While geopolitical risks and inflation concerns would normally support demand for safe-haven assets, the combination of strong economic data, rising bond yields, and a stronger U.S. dollar has limited the metal’s upside potential for now. Investors are expected to continue monitoring developments in the Middle East and upcoming economic data for clues about the future direction of interest rates and precious metal prices.