Gold prices slipped on Monday, as the yellow metal continued to be weighed down by the ongoing U.S.-Israel war with Iran.
Gold, which is typically a popular safe haven asset during geopolitical crises, has underperformed since the Middle East conflict began largely due to a stronger dollar, as investors priced in fewer interest rate cuts due to an inflationary shock from spiking oil prices.
Spot gold fell 0.6% to $4,989.34 an ounce by 12:57 ET (15:57 GMT), while gold futures fell 1.3% to $4,996.19/oz. Spot silver was lower by 0.3% to $80.3625 an ounce.
Iran war rages on
The Iran conflict showed few signs of easing, after the U.S. and Israel attacked a key export terminal over the weekend, sparking dire retaliation from Tehran.
Oil prices remained perched just above $100 a barrel, after Reuters reported that some U.S. allies, especially most countries in the North Atlantic Treaty Organization (NATO), had shown reluctance to respond to President Donald Trump’s call for help in reopening the critical Strait of Hormuz.
With the strait effectively closed by Tehran, a fifth of the world’s oil and gas supply has been shut off, leading to soaring oil prices.
Gold’s underperformance
Gold has largely underperformed since the advent of the conflict, as safe haven demand for the metal has been hit by fears of higher interest rates for longer due to the inflationary shock from spiking oil prices.
“Gold has struggled as it is being overshadowed by a stronger U.S. dollar, rising yields and uncertainty surrounding Federal Reserve policy,” analysts at ANZ said in a note, adding that liquidations by traders, to meet margin calls, had also factored into bullion’s price weakness.
But ANZ analysts noted that the base case for gold, as a haven against geopolitical uncertainty, still remained intact. Gold is still trading up about 16% so far in 2026.
Silver has been the worst performing asset in a basket of thirty major assets compiled by Deutsche Bank since the conflict began, according to an analysis by the brokerage. Gold has been the sixteenth-worst performer.
"(Precious metals) normally do well in a risk-off environment. However, they’ve faced headwinds because the strikes caused investors to price out the chance of central bank rate cuts this year, and even price in hikes for some places. Given precious metals are inversely correlated with interest rates, that’s meant they’ve struggled, with gold (-5%) and silver (-14%) both down," Deutsche Bank’s Jim Reid said.
Fed meeting awaited, hold largely priced in
The focus in markets this week is squarely on a two-day meeting of the Federal Reserve set to end on Wednesday. The central bank is widely expected to leave interest rates unchanged.
Bets on a hold were spurred chiefly by increasing uncertainty over the U.S. economy, especially as traders fretted over the potential energy-driven increase in inflation stemming from the Iran war.
The Fed’s independence received some support last week, after a U.S. judge on Friday blocked subpoenas issued by the Department of Justice (DoJ) against Chair Jerome Powell over alleged cost overruns. Powell had claimed that the subpoenas were aimed at intimidating the bank into cutting interest rates, with the court now ruling in his favor.
The subpoenas and the ensuing case had sparked heightened uncertainty over the Fed’s independence. The DoJ said it will appeal the decision, with the case likely headed for the Supreme Court.