Gold declines amid a rise in the dollar as Washington seizes an Iranian ship

Gold prices recovered some of their losses on Monday, after falling to their lowest level in a week earlier in the session, with the dollar and oil prices rising on the US seizure of an Iranian cargo ship and Iran threatening retaliation.

By 13:23 GMT, gold in spot transactions fell 0.3% to $4,818.03 per ounce, after recording the lowest level since April 13 earlier in the session.

US gold futures for June delivery fell 0.8 percent to $4,839.10.

The dollar rose to its highest level in a week before trimming its gains to trade 0.1% higher, as renewed tension between the United States and Iran caused a state of uncertainty in the markets about the chances of reaching a peace agreement. US 10-year Treasury bond yields rose, increasing the opportunity cost of holding non-yielding gold.

Fouad Rizqzadeh, a market analyst at City Index and Forex.com, said, “It is clear that the situation in the Middle East has intensified again, which has led to changing our expectations for gold to move slightly lower amid increasing risks of another sharp rise in oil prices, which could lead to a rise in the dollar and bond yields.”

The ceasefire between the United States and Iran appears to be in danger after the seizure of an Iranian cargo ship. Oil prices jumped by about 5% due to fears of the collapse of the ceasefire, and with flows through the Strait of Hormuz remaining largely halted.

Although gold is a hedge against inflation, demand for non-yielding assets diminishes when global interest rates are high. Borrowing costs may remain high for a longer period as a result of higher inflation; Because of the war in the Middle East.

As for other precious metals, silver in spot transactions fell 0.8 percent to $80.18 per ounce, platinum fell 1.2 percent to $2,077.35, and palladium fell 0.3 percent to $1,554.48.