Gold Plummets As Renewed U.S.-Iran Hostilities Raise Concerns Of Inflation, Fed Rate Hike

Gold prices extended last Friday’s losses and plunged Monday as the U.S.-Iran conflict escalated, with Iran closing the Strait of Hormuz and pushing crude oil higher. The resulting inflationary threats have revived concerns that could erode demand for gold as a hedge. Overall, the risk-off geopolitical development is the main driver behind the sharp move in safe-haven and commodity prices.

Analysis

Gold prices extended last Friday’s losses and plunged Monday as the U.S.-Iran conflict escalated, with Iran closing the Strait of Hormuz and pushing crude oil higher. The resulting inflationary threats have revived concerns that could erode demand for gold as a hedge. Overall, the risk-off geopolitical development is the main driver behind the sharp move in safe-haven and commodity prices.