Gold prices declined during Monday trading but trimmed earlier losses and remained above session lows as escalating tensions between United States Israel and Iran drove strong flows into dollar and lifted oil prices.
Precious metal continued trading well above 5000 dollars per ounce as rising geopolitical tensions pushed investors toward safer assets. Spot gold fell about 1 percent to 5117.82 dollars per ounce while gold futures slipped 0.7 percent to 5123.66 dollars per ounce after spot prices earlier dropped to 5015.23 dollars during session.
Despite benefiting from increased safe haven demand following conflict involving United States Israel and Iran gains in yellow metal remained limited due to concerns that inflationary pressures linked to war could push major global central banks toward tighter monetary policy.
During past week dollar outperformed gold while oil led gains across commodity markets amid concerns over potential supply disruptions linked to conflict with Iran. Both dollar and oil posted strong gains on Monday after United States and Israel launched strikes on Iranian oil facilities in move seen as possible escalation of war. Dollar index climbed around 0.6 percent while Brent crude surged as much as 30 percent moving above 100 dollars per barrel.
However oil prices later pared part of gains following reports that G7 countries were considering releasing strategic reserves to counter potential supply disruptions. Additional reports indicated producers in Saudi Arabia had offered to sell crude in spot market a rare step by kingdom.
Iran also carried out attacks on ships passing through Strait of Hormuz during weekend effectively disrupting one of most critical maritime routes in world through which roughly 20 percent of global oil supply moves.
Gold declined roughly 2 percent over past week as metal continued fluctuating between 5000 dollars per ounce and record level near 5600 dollars per ounce reached in late January amid elevated speculative activity and growing uncertainty about direction of interest rates.
In United States weaker than expected nonfarm payroll data released on Friday supported some expectations for possible interest rate cuts although market focus has now shifted toward inflationary implications of higher oil prices.
Among other precious metals silver also slipped during Monday trading briefly falling below 80 dollars per ounce before recovering most losses to trade down about 0.6 percent at 83.80 dollars per ounce. Platinum also declined 0.6 percent to 83.81 dollars per ounce but remained well above session lows.
Silver and platinum have experienced sharp volatility since significant drop seen in late January yet their relative safe haven appeal along with expectations of stronger industrial demand have helped keep prices elevated since start of year.
In industrial metals copper futures declined about 0.4 percent to 12817 dollars per ton.
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