Gold Surges to Three-Month High Amid Weaker Dollar and Escalating Geopolitical Tensions

Gold prices climbed to a three-month high on Monday, driven by a weakening US dollar and mounting geopolitical tensions. Spot gold rose 0.66 per cent to reach $4,646.52 per ounce by 11.20am UAE time, building on gains of more than 5 per cent from the previous week. The dollar dropped to a multi-month low following announcements from the US regarding an expansion of its bond buyback programme, which makes gold more affordable for international currency holders.

Naeem Aslam, chief investment officer at Zaye Capital Markets, noted that the current gold market is shaped by multiple forces rather than a single catalyst. He highlighted comments from US President Donald Trump regarding potential military intervention, control around the Strait of Hormuz, and stalled trade negotiations with Canada as key contributors to uncertainty in energy supply, tariffs, and inflation.

White House Treasury Secretary Scott Bessent stated that the conflict involving Iran is reaching its final stage, announcing a major financial offensive against Tehran. Meanwhile, expectations of a softer monetary policy from the Federal Reserve have further supported gold prices, with markets anticipating steady interest rates in September.

In contrast, oil prices retreated on Monday following weeks of gains as markets braced for upcoming US measures against Iran. Brent crude dropped 1.41 per cent to $93.06 per barrel, while West Texas Intermediate fell 1.65 per cent to $85.62 a barrel. Noureldeen Al Hammoury, chief market strategist at Equiti Group, pointed to profit-taking and geopolitical uncertainty as drivers for the oil price correction.

Adding to market volatility, Iran's Supreme National Security Council Secretary Mohsen Rezaei warned that Tehran could halt all oil exports through the Strait of Hormuz if the US moves forward with its isolation plan. The ongoing conflict, which began on February 28, has severely disrupted shipping through the vital global crude transit route.