Gold prices (XAU/USD) fell to around $5,100 due to the strengthening pressure of the US Dollar (USD) and concerns about inflationary pressures due to the conflict between the United States and Iran, which could potentially increase geopolitical risks.
At 9 am, gold prices were at $5,054, down 2.20% since it opened early Monday in Asian trading.
The precious metal also came under selling pressure as rising crude oil prices sparked concerns about inflation in the United States.
This situation increased expectations that the Federal Reserve (Fed) may maintain higher interest rates for a longer period. This situation usually has a negative impact on gold because the asset does not offer interest returns.
The market expects the US central bank to maintain interest rates at its next meeting scheduled for March 17-18. Most economists predict that any interest rate cut is only likely to happen around June or July 2026.
Federal Fed Governor Christopher Waller believes that the current rise in oil prices is more temporary and does not necessarily require a policy response from the Fed. However, he also acknowledged that there is uncertainty if geopolitical conflicts continue and oil prices continue to rise.
In other developments, weaker-than-expected US labor market data could potentially weigh on the US dollar and support a rise in USD-denominated commodity prices in the near term.
The February jobs report showed an increase in jobs of only 92,000, while the unemployment rate rose to 4.4% compared to 4.3% in January.
