Gold Continues to Decline as Iranian-Israeli Attacks Threaten Fragile Ceasefire

SadaNews - Gold continued to decline after Israel announced it targeted Iranian sites in response to missile attacks launched by Tehran, threatening the fragile ceasefire in the Middle East.

The precious metal fell by as much as 0.7%, trading near $4288 per ounce, after losing about 5% of its value last week during the worst escalation of hostilities in the region since the ceasefire was reached in early April. Fighting intensified on Monday, as the Israeli army said it targeted military sites in western and central Iran after intercepting missiles launched from Tehran.

The latest strikes came despite U.S. President Donald Trump's call for Israel to avoid escalation, as he continues to seek a negotiated solution to the conflict. A military advisor to the Iranian leader stated that the missile fire towards Israel on Sunday was a "warning" to cease attacks in Lebanon, a side front that has posed one of the main obstacles in negotiations aimed at reaching a broader agreement between Washington and Tehran.

Inflation Risks Pressure Gold

The war, now in its fourth month, has disrupted energy flows through the Strait of Hormuz, driven up oil prices, and raised global inflation concerns.

This increases the likelihood that central banks will keep interest rates unchanged or raise them, which represents a negative factor for precious metals.

Rona O'Connell, Head of Market Analysis at StoneX Group, said in a note that the key issues related to the conflict in the Middle East remain "unresolved". She added: "So far, it seems that our expectations of continued downward price trends are being realized, but we continue to monitor any buying aimed at seizing opportunities at lower levels."

Gold had given up its gains made since the start of the year on Friday, after strong U.S. jobs data boosted market bets that the Federal Reserve would raise borrowing costs throughout 2026.

U.S. bond yields and the dollar rose after May's job growth exceeded all expectations, putting pressure on gold priced in the U.S. dollar.

China Continues to Build Reserves

Traders are also evaluating a new round of gold purchases by the People's Bank of China, which added around 10 tons to its reserves last month. This represents the largest monthly purchase volume since 2024, extending the Chinese central bank's consecutive buying streak to 19 months, reflecting continued interest from one of the world's largest buyers.

Silver Price

Silver prices were also recorded near $66 per ounce.