Gold prices plunged below $4,100 to trade near $4,070 during early Asian session Monday as fresh military strikes between the United States and Iran rattled markets. The precious metal, typically considered a safe haven asset, extended losses despite heightened geopolitical tensions in the Middle East. The counterintuitive selloff reflects growing trader concerns that the conflict could disrupt oil supplies and trigger a fresh wave of inflation, potentially forcing central banks to maintain restrictive monetary policies longer than anticipated. Higher interest rates traditionally weigh on non-yielding assets like gold, overriding its safe haven appeal in this scenario. Traders and brokers are closely monitoring developments as the situation evolves, with particular attention on crude oil price movements and potential Federal Reserve policy implications. The breakdown below the psychologically important $4,100 level may trigger further technical selling if geopolitical tensions continue escalating.
FXnCO Insight
Watch crude oil markets closely as the primary inflation driver here, with gold’s direction now inversely tied to rate expectations rather than following traditional safe haven patterns.
Source: FXStreet