By: Economy Middle east

Gold prices fell on Monday as the dollar strengthened, while news that the Strait of Hormuz has been closed again pushed oil prices higher and revived inflation concerns.

U.S. gold futures for June delivery fell 1.39 percent to $4,811.74 as of 8:49 a.m. UAE time. Meanwhile, spot gold rose 0.44 percent to $4,792.31 per ounce after hitting its lowest level since April 13 earlier in the session.

In the UAE, local gold rates declined, with 24-carat gold dropping AED4.75 to AED577.50 and 22-carat easing AED4.25 to AED534.75. 21-carat gold also edged down AED4.25 to AED512.75, 18-carat slid AED3.50 to AED439.50, and 14-carat gold fell AED2.75 to AED342.75.

The dollar index strengthened, making dollar-priced bullion more expensive for holders of other currencies. Benchmark 10-year U.S. Treasury yields also gained 0.5 percent. Oil prices jumped while stocks wobbled as rising tensions in the Middle East kept shipping in and out of the Gulf to a bare minimum.

The United States has seized an Iranian cargo ship that tried to break its blockade, and Iran said it would retaliate, raising doubts that the ceasefire between the two countries will last even the two days it is scheduled to remain in force.

Tehran said it would not take part in a second round of talks that Washington had hoped to begin before the ceasefire expires on Tuesday.

Gold falls on rate fears

Gold prices have fallen about 8 percent since the United States and Israel launched strikes on Iran in late February, as higher energy prices raised concerns about inflation and the possibility of interest rates staying higher for longer. While gold is usually seen as an inflation hedge, higher rates reduce demand for the non-yielding metal.

Gold demand during one of India’s key buying festivals remained muted on Sunday, as record prices discouraged jewelry purchases, offsetting a modest pickup in investment demand.

Among other metals, spot silver rose 0.70 percent to $79.83 per ounce, platinum fell 2.15 percent to $2,095.70, and palladium declined 0.52 percent to $1,534.00.