Gold Prices Decline Amid Escalating Global Tensions and Disappointing Jobs Report

Global Markets on Edge as Middle East Conflict Escalates

Gold prices extended their decline on Monday, reaching a low of $4,600 an ounce, as the escalating war in the Middle East heightened energy-supply and inflation risks. The precious metal fell by as much as 1.6% in a single day, having lost 1.7% in the previous session.

The conflict in the Middle East has been fueled by a series of attacks on energy infrastructure in the region, including a barrage of strikes on Kuwait's oil-refining and petrochemical facilities. In response, US President Donald Trump issued an ultimatum to Iran, stating that he would bring "Hell" to the country if it did not reopen the Strait of Hormuz. However, Tehran rejected the ultimatum and continued to launch attacks on energy targets in the region.

The escalating conflict has also had a significant impact on the US job market, with nonfarm payrolls in March rising by the most since the end of 2024. According to the Bureau of Labor Statistics, the increase in nonfarm payrolls will likely reinforce the Federal Reserve's focus on inflation risks, which are compounded by higher oil prices. This, in turn, reduces the likelihood of a reduction in borrowing costs, which typically benefits non-yielding gold.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

| Comparison of US Gasoline Prices | | --- | --- | | Pre-conflict price | $3.50 per gallon | | Post-conflict price | $4.50 per gallon | | Increase | $1.00 per gallon |

The spike in US gasoline prices will be on full display when key US inflation data is released this week. Economists are forecasting a 1% increase in the consumer price index for March, which would be the sharpest one-month advance since 2022. The war has added more than $1 per gallon to prices at the pump, and crude oil climbed again on Monday.

Gold has fallen by more than 12% since the conflict began in late February, as spiking energy prices have stoked fears of inflation and the prospects for rate cuts have receded. The precious metal's haven appeal has also been dimmed by the need for investors to liquidate their positions and cover losses elsewhere.

| Gold Price Movement | | --- | --- | | Pre-conflict price | $5,200 an ounce | | Post-conflict price | $4,600 an ounce | | Decline | $600 an ounce (12% decrease) |

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The market is also being influenced by Trump's frequently contradictory messaging on the conflict, which has oscillated between threats to step up attacks and signals that the war is nearing an end. As a result, gold is being traded on headlines, with investors taking chips off the table to protect their assets.

Spot gold fell 1.1% to $4,623.32 an ounce at 9:56 a.m. Singapore time, while silver dropped 1.6% to $71.88. Platinum declined, while palladium was little changed. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.1% after ending the previous session up 0.3%.