Gold retreated to $3,355 per ounce despite rising tensions in the Middle East after the United States and Israel struck Iran’s nuclear facilities over the weekend. The metal initially climbed about 0.8% but reversed course as the dollar strengthened.
Why gold isn’t rallying more: Geopolitical turmoil normally supports gold as a safe-haven asset, but investors are weighing two main concerns. First, many market participants doubt the conflict will escalate significantly — Iran has not launched a clear retaliation and lacks visible backing from major powers such as Russia and China. Second, a sharper rise in oil prices driven by regional instability could push inflation higher, prompting the Federal Reserve to maintain elevated interest rates. Higher rates tend to weigh on non-yielding assets like gold.
The bigger picture: Even with recent moves, gold has gained nearly 30% year-to-date and remains about $145 below its April record high. Analysts generally expect prices to stay elevated amid continued geopolitical uncertainty and supportive monetary conditions, though near-term direction will depend on developments in the region and central-bank policy decisions.