Gold Declines As Dollar Gains On Escalating Iran War

(RTTNews) - Gold prices traded lower on Monday, with a firmer dollar and weakening expectations of an early interest rate cut by the U.S. Federal Reserve weighing on the precious metal.

Spot gold was down a little over 1 percent at $5,117.39 an ounce while U.S. gold futures were down 0.6 percent at $5,127.05.

Investors are recalibrating their portfolios amid a surging greenback as the Iran-Israel-U.S. war entered its 10th day and the Strait of Hormuz, a critical trade route, remained shut for the sixth consecutive day.

Iran fired its first missiles towards Israel today following the appointment of Ayatollah Mojtaba Khamenei as the Islamic Republic's new supreme leader.

On Sunday, Iran pressed attacks on neighboring Gulf states, with Qatar, Kuwait, and Bahrain all reporting missile and drone strikes.

The U.S. reportedly ordered diplomats and embassy staff to leave Saudi Arabia after drone attacks hit U.S. embassies in Riyadh.

According to U.S. President Donald Trump, attacks on Iran would continue "until they surrender or, more likely, completely collapse."

As investors factor in heightened inflation risk and prolonged energy disruption, market concerns also shifted toward the Federal Reserve's policy path.

Federal Reserve Bank of Cleveland President Beth Hammack said on Friday that rates should be on hold for quite some time and if price pressures do not retreat, the Fed may have to weigh tighter monetary policy to ensure price pressures retreat to 2 percent.

In economic releases, U.S. reports on consumer prices, durable goods orders and consumer sentiment may attract attention this week amid lingering concerns affecting Fed decisions.