Gold price today: Why are gold rates falling amidst Iran war? Experts predict what to expect

Gold prices have edged lower as investors awaited further signals on the U.S.-Iran situation ahead of the Tuesday deadline to reopen the Strait of Hormuz. Spot gold fell 0.42 per cent to $4,656.21 an ounce

"Markets are starting to digest that they can't take any single headline at face value. And part of that is that President Trump and Iran have been shifting their sentiment about how likely ceasefire negotiations are going to be," said Will Compernolle, macro strategist at FHN Financial in Chicago.

The yield on benchmark U.S. 10-year notes ​fell 0.5 basis points to 4.341 per cent from 4.346 per cent, while the 30-year bond yield fell 1.1 basis points to 4.8948 per cent.


"Focus ⁠is likely ‌to remain on the war and interest rates. If the ​conflict drags ​on, oil will grind higher amid tightening supply conditions, adding ⁠to inflationary pressures," said Bart Melek, global head of ​commodity strategy at TD Securities.

"That leaves central banks, particularly ​the Federal Reserve, with less room to ease policy and could even revive discussions about higher rates if energy prices rise further, which is negative for gold," Melek said.

In precious metals, Gold is widely regarded as a ‌hedge against geopolitical risks and inflation, but because it yields no interest, it tends to be less attractive when interest rates ​are high.

Other ​items on investors’ radar ⁠include minutes of the Fed’s March policy meeting due on Wednesday, U.S. Personal Consumption Expenditures (PCE) data due on Thursday, and the Consumer Price Index (CPI) on Friday.

The U.S. ​central bank held rates last month and a majority of traders now see no chance of the Fed cutting interest rates this year, according to CME’s FedWatch tool.

Spot silver fell 0.3 per cent to $72.81 per ounce, platinum lost 0.6% to $1,976.21, and palladium was down 1.1 per cent at $1,487.22.