Gold falls, posts 9% monthly gain

Gold Bars

Gold prices declined on Monday, pressured by renewed geopolitical tensions in the Middle East, which brought concerns over tighter monetary policy to contain the inflationary fallout from the conflict back into focus.

The US carried out a strike on an Iranian island in the Strait of Hormuz, with Tehran saying it had responded, escalating the conflict, which has entered its sixth month in its latest round.

The developments pushed oil prices higher, renewing concerns about the inflationary impact of the conflict, particularly after Federal Reserve Chair Kevin Warsh said last week that the US central bank was prepared to act to contain price pressures.

Gold recently benefited from a temporary period of relative calm in geopolitical tensions after the US shifted its strategy toward Iran to focus more heavily on economic sanctions.

These developments helped gold post its strongest monthly gain since January in August, particularly as investors bet on further upside for the precious metal amid a weaker dollar and efforts by the US Treasury Department to lower long-term debt yields.