Gold slips as Middle East tensions fuel bond market turmoil

Gold held onto its decline as the lack of progress in reopening the Strait of Hormuz continued to fuel inflation concerns that have pressured bond markets globally.

Bullion was steady at around $4,540 an ounce after falling nearly 4% last week, News.Az reports, citing Bloomberg.

The US and Iran remain far apart on a potential agreement to end weeks of conflict and reopen Hormuz, a critical route for global energy supplies.

Oil prices rose on Monday after President Donald Trump renewed threats against Iran, increasing expectations of higher interest rates that typically weigh on non-yielding gold.

The precious metal has traded within a relatively narrow range since dropping sharply in the early stages of the conflict, as investors balance inflation risks—which could keep interest rates elevated—against growth concerns that could eventually lead to monetary easing if the war persists. Overall, gold has fallen about 14% since the conflict began.

A drone strike on Sunday that caused a fire at a nuclear facility in the United Arab Emirates further highlighted concerns over the fragility of the US-Iran ceasefire.

Global bond markets have also declined amid fears that war-driven inflation could push central banks to raise interest rates further. The selloff has driven yields higher as uncertainty grows over how quickly Middle Eastern oil supplies can normalize.

According to analysts including Gregory Shearer at JPMorgan Chase & Co., new investment inflows into precious metals have “dried to a trickle” due to concerns over higher interest rates. They added that a resolution to the conflict would be crucial to reviving demand, although central bank buying is expected to provide some support.

India’s gold demand has also weakened due to tighter import regulations. Gold imports have slowed significantly as traders face higher duties, while recent restrictions on silver imports have been introduced to support the country’s currency, which has fallen to a record low.

Investors are also awaiting the release of minutes from the US Federal Reserve’s April meeting later this week for further signals on the future interest rate path.

Spot gold was unchanged at $4,541.24 an ounce as of 3:22 p.m. in Singapore. Silver fell 0.5% to $76.61 an ounce after dropping more than 5% last week. The Bloomberg Dollar Spot Index declined 0.1% after rising 1.2% last week.

News.Az 

By Nijat Babayev