Gold Slips as Strong Dollar and Oil Weigh; Markets Await Trump’s Iran Decision

Gold prices retreated on Monday, reversing some of the previous session’s rally to a two-week high, as a strengthening US dollar and rising crude oil prices combined to exert downward pressure. Spot gold slipped between 0.2 and 0.7 per cent depending on the time of the fix, with London benchmarks around $4,520 per ounce and New York futures for August delivery dropping roughly 0.9 per cent. The dollar’s uptick made bullion costlier for holders of other currencies, while the climb in oil – driven by geopolitical anxiety over the Middle East – added to the cautious mood.

The immediate focus for investors was President Donald Trump’s impending decision on a proposed deal to extend the ceasefire with Iran. Despite the traditional safe-haven appeal of gold during periods of tension, the metal struggled to find direction as the elusive nature of the agreement kept markets off balance. Tim Waterer, chief market analyst at KCM Trade, captured the sentiment: “Oil’s uptick, combined with the still-elusive US-Iran deal, is just enough to keep gold off balance at the start of the week.” Trump said on Friday he would decide soon, but fundamental disagreements persist, leaving diplomatic channels open yet fraught with risk.

Viewed from the Gulf, the price action had tangible effects on physical bullion markets. In Dubai, 24-carat gold fell by 3.5 dirhams per gram in early Monday trade, settling at Dh544.0 per gram, according to local retailers. The emirate’s jewellery quarter often acts as a bellwether for regional demand, and the decline reflected the cautious stance of buyers who are also grappling with higher local fuel costs and the broader economic uncertainty. Analysts in London noted that while Middle Eastern tensions typically boost gold, the counterforce of a rising dollar – which tends to strengthen when geopolitical risk spikes in the region – created an unusual tug-of-war.

Looking ahead, the metal’s trajectory hinges on two factors: the content of Trump’s announcement and the resilience of the dollar. Should a ceasefire extension be secured, the immediate geopolitical premium in oil could deflate, further denting gold’s appeal. Conversely, a breakdown in talks would likely reignite safe-haven demand, but such a move might be tempered if the dollar continues to act as the preferred refuge. Seasoned traders are positioning for heightened volatility, with the 4,500 dollar per ounce level now a critical floor that could determine short-term sentiment across both paper and physical markets.