Gold falls on strong dollar, dimming Fed rate cut hopes

Gold prices fell to a near one-week low on Monday, pressured by a stronger dollar, while a surge in energy prices fuelled inflation worries and dampened expectations for U.S. Federal Reserve interest rate cuts this year.

FUNDAMENTALS

* Spot gold was down 1.1% at $4,694.30 per ounce by 0100 GMT, its lowest level since April 7. ‌U.S. gold ⁠futures ⁠for June delivery fell 1.4% to $4,717.80.


* The dollar index strengthened, making greenback-priced bullion more expensive for other currency holders.

* Oil prices jumped above $100 a barrel, stoking inflation fears, as the U.S. Navy prepared a blockade of the Strait of Hormuz that could restrict Iranian oil shipments after the U.S. and Iran failed to reach a deal to end the war.

* ⁠Iran's Revolutionary ‌Guards responded by warning that military vessels approaching the Strait will be considered a ceasefire breach and dealt with harshly and ⁠decisively, underlining the risk of a dangerous escalation.

* Spot gold has fallen over 11% since the U.S.-Israel conflict with Iran began on February 28.

* Traders now see little chance of a U.S. rate cut this year, as higher energy prices threaten to feed into broader inflation and limit the scope for monetary easing.

* Before the war in the Middle East began, there were expectations ‌of two Fed rate cuts for this year.

* While inflation typically boosts gold's appeal as a hedge, elevated interest rates weigh on the non-yielding metal's demand.

* ⁠Gold demand in India picked up slightly last week ahead of a key festival, although elevated prices weighed on sentiment, while premiums in China narrowed as retail demand slowed.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.1% to 959.24 tonnes on Thursday.

* Among other metals, spot silver fell 1.9% to $74.45 per ounce, platinum lost 1.3% to $2,019.35, while palladium gained 0.7% to $1,531.50.

DATA/EVENTS (GMT)

1400 US Existing Home Sales Mar