Gold prices moved unevenly on Monday as investors tracked a easing sell-off in global bond markets and fresh geopolitical tension in the Middle East.
Spot gold rose 0.7% to $4,570.60 an ounce earlier in the session. But prices had also dropped to their lowest point since March 30 earlier in the day, showing how choppy trading has been.
Gold futures were down 0.3% to $4,574.20 an ounce at one point during the session.
The moves came as global bond yields pulled back after a rough stretch in government debt markets. That sell-off had rattled investors in recent days.
Oil prices also turned lower. Iranian media reported that the U.S. proposed a temporary waiver on oil sanctions against Iran until a final peace deal is reached between Washington and Tehran.
Gold has actually fallen back from where it was at the start of the Iran conflict in late February. That might seem odd given the ongoing war, but there is a reason.
Investors have been moving into the U.S. dollar as a safe-haven asset instead. The dollar has been supported by the view that the U.S. economy, as a major energy exporter, may be better protected from an energy shock caused by the war.
A stronger dollar makes gold more expensive for buyers in other countries, which can reduce demand.
Concerns about inflation have also worked against gold. If the war pushes prices higher, central banks may raise interest rates. Higher rates can make non-yielding assets like gold less attractive to investors.
Over the weekend, a drone attack caused a fire at a nuclear facility in the United Arab Emirates. Saudi Arabia also said it intercepted three drones.
These events cast fresh doubt on the fragile ceasefire between the U.S. and Iran.
President Donald Trump posted on social media that “the clock is ticking” for Iran to reach a peace deal. He suggested the U.S. could resume military action if no agreement is made.
Some investors had hoped Trump’s visit to China last week might help move Iran negotiations forward. China is one of the largest importers of Iranian oil, giving it leverage in the talks.
But the summit produced no immediate commitments from Beijing.
David Morrison, Senior Market Analyst at Trade Nation, said the weekend brought back concerns that had briefly faded while Trump was in China.
“It became painfully apparent that the Chinese trip was a non-event, while Iran appears in no mood to accede to the U.S. peace plan,” Morrison said.
With the ceasefire under fresh pressure and no diplomatic breakthrough in sight, gold prices are likely to stay volatile in the near term.
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