Gold Drops 1.5% As Iran War Fuels Oil Surge and Dollar Strength

TLDR

• Spot gold fell 1.5% to $5,096.51/oz on Monday, touching a session low of $5,015.23/oz
• A surge in oil prices — Brent briefly neared $120/barrel — fueled inflation fears, pressuring gold
• The US dollar index rose as much as 0.7%, weighing on precious metals
• Gold remains above $5,000/oz and is still up roughly 18% year-to-date
• Silver, platinum, and palladium all fell on Monday, though silver recouped most of its losses

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Gold pulled back sharply on Monday as the US-Israel war with Iran entered its 10th day, sending oil prices soaring and the dollar higher — two headwinds that hit precious metals hard.

Spot gold fell 1.5% to $5,096.51/oz by mid-morning London time. At the worst of the session, it dropped to $5,015.23/oz, briefly threatening to break back below the $5,000 level. Gold futures slid 1.1% to $5,104.04/oz.

Micro Gold Futures,Apr-2026 (MGC=F)

The selloff came as Brent crude surged as much as 30%, at one point nearing $120 a barrel, after US and Israeli forces struck Iranian oil facilities over the weekend. Iran responded by attacking ships in the Strait of Hormuz, a waterway that handles roughly 20% of global oil supply.

That oil spike immediately got investors thinking about inflation — and what it might mean for interest rates.

Inflation Fears Put Fed Back in Focus

Higher crude prices raise costs across the economy, which could push inflation higher. That, in turn, reduces the odds of Federal Reserve rate cuts — and potentially raises the chances of a hike. Gold, which pays no interest, tends to suffer when rates are expected to stay high or go higher.

The Bloomberg Dollar Spot Index rose 0.3% on Monday after gaining 1.3% the prior week. A stronger dollar makes gold more expensive for foreign buyers, adding extra pressure.

That tension — haven demand pulling one way, rate fears pulling the other — has defined gold’s choppy trading in recent weeks. The metal has swung between $5,000/oz and a near $5,600/oz record high hit in late January.

Gold fell roughly 2% last week. Friday’s weaker-than-expected US jobs report briefly lifted hopes for rate cuts, but the oil surge quickly overshadowed that.

Other Metals Also Under Pressure

Silver briefly dipped below $80/oz before recovering. It ended the session down 0.9% to $83.82/oz. Platinum fell 1.8% and palladium dropped 1.7%. Copper futures slid 0.7% to $12,781.0 a ton.

Despite Monday’s drop, gold is still up around 18% so far this year. Central bank buying has been a steady support, with the People’s Bank of China purchasing gold for the 16th consecutive month in February.

Ed Meir, analyst at Marex, said in a note last Friday that a quick end to the conflict would likely weaken the dollar and lift gold, while a longer war would push yields and the dollar higher on inflation expectations. Brent crude was last trading up around 12.5% on the day.

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