Gold prices fell on Thursday as escalating tensions in the Middle East and stronger-than-expected U.S. employment data bolstered the dollar, reducing demand for the safe-haven metal. Spot gold dropped 0.8% to $2,150 per ounce, while U.S. gold futures declined 1% to $2,165.
Analysts attributed the decline to a combination of factors, including a surge in the U.S. dollar index following positive jobs data and renewed geopolitical risks from Iran. “The dollar’s strength is weighing heavily on gold,” said a commodities strategist at a major investment bank. “Investors are also reassessing safe-haven flows as the Iran situation remains volatile.”
The U.S. Labor Department reported 275,000 new jobs in February, exceeding forecasts and reinforcing expectations that the Federal Reserve may delay interest rate cuts. Higher rates typically diminish gold’s appeal as they increase the opportunity cost of holding non-yielding assets.
Meanwhile, heightened Middle East tensions following Israeli airstrikes in Syria and Lebanon have kept markets on edge. Some analysts suggest gold’s pullback may be temporary. “If the Iran conflict escalates further, we could see a swift reversal in gold prices,” noted a precious metals trader.
Market participants are now closely watching upcoming U.S. inflation data and Fed commentary for further direction on monetary policy and its impact on bullion prices.