Spot Gold gained in a volatile Monday session, as the Middle East conflict entered its fifth week and there still was no clear resolution in sight.
But Gold upside seemed limited by a surge in energy prices, which further dampened expectations of Federal Reserve rate cuts.
The confrontation has intensified after Iran-backed Houthi militants in Yemen targeted Israel over the weekend. These developments pushed Brent crude price above $115 per barrel, with the contract gaining 60% so far in March – its largest monthly rise on record.
At the same time, media reports indicated that the US was preparing for weeks of ground operations in Iran, after additional troops were deployed in the region.
Gold and other metals have faced heavy selling pressure, as rising energy prices fueled inflation concerns and reinforced the case for tighter monetary policy.
Traders are no longer expecting two rate cuts by the Federal Reserve this year. According to the CME FedWatch tool, there is now about 24% chance of at least one rate hike.
Higher interest rates tend to increase the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last up 0.73% on the day to trade at $4,526.70 per troy ounce.
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