Bullion experienced a significant downturn on Monday as escalating confrontations in the Strait of Hormuz unnerved investors and drove crude prices upward, sending precious metal values tumbling nearly 2% at their session trough.
Spot bullion declined 0.9% to reach $4,786 per ounce during Asian market hours. Futures contracts slipped 1.5% to settle at $4,804 per ounce. While both instruments clawed back some losses from their lowest levels, downward momentum persisted throughout the session.
President Donald Trump revealed during the weekend that American naval forces had engaged and captured an Iranian-registered cargo vessel that was attempting to circumvent a maritime blockade. Tehran issued warnings that any ships approaching the Strait of Hormuz would be interpreted as violations of the ceasefire agreement.
Multiple commercial vessels were compelled to reverse course from the critical shipping corridor mere hours after Iran had announced the passage was accessible on Friday. This sudden policy reversal intensified skepticism regarding prospects for diplomatic resolution.
The two-week truce is scheduled to conclude on Tuesday. While Trump indicated he perceives opportunities for an agreement, he simultaneously reiterated threats to strike Iranian critical infrastructure. Iranian officials countered that meaningful dialogue appeared increasingly unlikely.
Diplomatic discussions were planned for Islamabad, though Iranian state media indicated Tehran had not confirmed participation in any forthcoming negotiation sessions.
Oil prices skyrocketed by as much as 7% on Monday following a decline in the prior trading session. Natural gas values also advanced. The dramatic spike in energy markets rekindled anxieties about inflationary pressures stemming from the persistent supply disruption.
A strengthening dollar imposed additional downward force on bullion. The Bloomberg Dollar Spot Index advanced 0.2%, rendering precious metals more costly for international purchasers using alternative currencies.
Gold has now surrendered approximately 9% of its value since hostilities with Iran commenced in late February. The military confrontation has triggered an energy supply crisis that has amplified inflation and diminished expectations that central banks will reduce interest rates, thereby undermining demand for non-interest-bearing assets like precious metals.
Investors are closely monitoring the US Senate confirmation proceedings for Kevin Warsh, Trump’s nominee to chair the Federal Reserve, which are slated for Tuesday.
Market analysts suggest that any indication Warsh supports accommodative monetary policy could bolster bullion valuations. Conversely, a hawkish posture on inflation could accelerate price declines.
Strategists at OCBC noted they anticipate gold’s trajectory will continue to be influenced by overall risk appetite and developments in ceasefire discussions. They advocated for accumulation during price pullbacks rather than pursuing momentum, projecting a near-term trading band between $4,700 and $4,900 per ounce.
Lorenzo Portelli, head of cross asset strategy at Amundi, suggested the inflationary consequences from the energy disruption are more likely to be transient rather than persistent.
Silver retreated 1.5% to $79.62 per ounce. Silver had exceeded gold’s performance during the preceding week following an industry analysis highlighting a deteriorating supply shortfall projected for 2026. Platinum and palladium also recorded losses on Monday.
Spot gold was quoted at $4,786 as of mid-afternoon trading in Singapore.
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