Gold Prices Fall on Dollar Strength, Fading US Rate-cut Hopes

Gold bracelets and necklaces are displayed for sale at a gold shop in the Grand Bazaar in Istanbul (AFP)

Gold prices fell on Monday, as a stronger US dollar weighed on the greenback-priced bullion, while higher energy costs fueled inflation concerns and further dimmed the prospects for near-term reductions in interest rates.
Spot gold shed 1.4% to $5,097.70 per ounce as of 0750 GMT, after falling more than 2% earlier in the session. US gold futures for April delivery lost ‌1% to $5,106.
The ‌dollar rose to a more than three-month ‌high, ⁠making bullion more expensive ⁠for holders of other currencies.
The US 10-year Treasury yields climbed to a one-month high, raising the cost of holding non-yielding gold.
"Gold is on the back foot today despite the market tumult, with triple-digit oil prices boosting the dollar on inflation fears and scaled back rate-cutting expectations," said Tim Waterer, KCM Trade chief market ⁠analyst.
Crude oil prices surged more than 15% to ‌above $110 per barrel, as the widening ‌US-Israeli war with Iran prompted some major Middle Eastern oil producers to ‌cut supplies amid fears of prolonged disruption to shipments through ‌the Strait of Hormuz.
"Much of gold's price rise over the last 12 months was predicated on a dovish outlook for US interest rates, but given the inflation risk presented by $100 per barrel oil, rate cuts are ‌no longer a given and gold has repriced accordingly," Waterer said.
Investors expect the US Federal Reserve ⁠to hold ⁠rates steady at the end of its two-day meeting on March 18, per CME Group's FedWatch tool. The odds of a June hold, which were below 43% last week - when the war began, climbed to more than 51%.
Non-yielding bullion tends to thrive in a low-interest-rate environment.
Meanwhile, Iran on Monday named Mojtaba Khamenei to succeed his father, Ali Khamenei, as supreme leader, signaling that hardliners remain firmly in charge and further escalating tensions in the region.
Spot silver fell 1.3% to $84.42 per ounce, after losing over 5% earlier in the session. Spot platinum lost 1.3% to $2,108.05 and palladium fell 2.4% to $1,586.75.