According to Reuters, spot gold prices fell 0.3% to 4,521.25 USD/ounce at 5:20 GMT (ie 12:20 Vietnam time), after hitting a two-week high in the previous session. US gold futures for August delivery fell 0.9% to 4,551.6 USD/ounce.
The rising USD makes gold valued in greenbacks more expensive for holders of other currencies.
The upward momentum of oil prices, along with the still unclear US-Iran deal, are enough factors to cause gold prices to lose balance at the beginning of the week," said Tim Waterer, Market Analysis Director at KCM Trade.
US President Donald Trump said on Friday that he would soon make a decision on the proposal to extend the ceasefire with Iran, although the two countries still seem to have differences on many important issues, which are central to the conflict.
The US said it attacked Iranian military facilities last weekend, while the Iranian Islamic Revolutionary Guard Corps on Monday announced it had targeted a US base in response.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu has ordered the military to go deeper into Lebanon in the fight with Iranian-backed Hezbollah forces, despite the ceasefire announced more than six weeks earlier.
Oil prices rose more than 2% in the first trading session of Monday, raising concerns about inflation and the possibility of further interest rate hikes.
Although gold is often considered an inflation hedging channel, this precious metal is less attractive in a high-interest rate environment, as it does not bring yields.
US Federal Reserve (Fed) Deputy Chairman in charge of oversight Michelle Bowman said on Friday that the impact of the war in the Middle East on the economy, although still controllable, could lead to persistent inflation, thereby requiring tighter monetary policy.
By the end of 2026, gold prices are still likely to reach the $5,500/ounce mark if favorable conditions arise, notably due to falling oil prices and weakening the USD, along with strong continuous buying power from central banks and the role of gold as a hedging channel against geopolitical risks and inflation," Mr. Waterer said.
On other precious metal markets, spot silver prices increased by 0.7% to 75.81 USD/ounce; platinum prices increased by 1.5% to 1,945.15 USD/ounce; palladium prices increased by 1.4% to 1,372.75 USD/ounce.
