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Gold falls as tensions between the US and Iran increase due to inflation woes, a stronger dollar and rising US interest rates

The gold price fell Monday due to the stronger dollar. Dollar and inflation fears after another closure of the?Strait of Hormuz drove oil prices higher.

As of 1103 GMT spot gold was down 0.8% to $4,790.59 an ounce after reaching its lowest level since April 13 earlier in session.

U.S. Gold Futures for June Delivery fell by 1.4% to $4.811.

Oil's rise after the weekend chaos surrounding the Strait of Hormuz ensures that inflation risks are palpable and offsets gold's appeal as a safe haven asset. Han Tan, Bybit's chief market analyst, said that the dollar has been the safest haven during the conflict.

Spot?gold will likely remain at these low levels of under $5,000 unless there is a sustained and meaningful de-escalation in the conflict.

The U.S. announced?on Sunday? that it had seized an Iranian cargo vessel that attempted to break its blockade, while Iran declared it would retaliate. This heightened fears about a possible resumption in hostilities.

The oil prices rose around 5% as a result of fears that the ceasefire agreement between the United States of America and Iran may collapse. Traffic through the Strait of Hormuz was largely stopped.

Dollar index rose, increasing the price of greenback bullion for holders of other currencies. Benchmark 10-year U.S. Treasury Yields increased, increasing the cost of holding non-yielding gold.

Gold is considered a safe-haven during geopolitical and economic uncertainty. However, the rising costs of energy due to the war in Iran has stoked inflation fears and caused the yellow metal's price to drop on the expectation that the U.S. Federal Reserve will tighten monetary policy.

"Gold has the potential to continue its recent recovery as long as structural demand drivers remain." "Central bank buying, currency debasement and de-dollarisation trends have faded, but they are still alive and can help support gold," said Nikos tzabouras, senior analyst at Jefferies owned Tradu.com.

Silver spot fell 2.1%, to $79.07 an ounce. Platinum dropped 1.7%, to $2,066.90. Palladium declined 1.6%, to $1,533.64. (Reporting by Anjana Anil in Bengaluru; Editing by Kevin Liffey)

(source: Reuters)