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Gold prices (XAU/USD) opened over 1% lower near $4,445 on Monday, driven by rising oil prices amid escalating fears of conflict escalation in the Middle East. West Texas Intermediate (WTI) crude oil surged nearly 3% above $102.50, reflecting heightened geopolitical tensions and inflationary pressures. The market is closely monitoring developments in the region, as any further military actions or sanctions could disrupt energy supplies and push inflation higher.
The decline in gold highlights its reduced safe-haven appeal amid rising oil prices, which often correlate with inflation. Traders are weighing the impact of higher energy costs on central bank monetary policies, particularly in the US and Gulf regions. A prolonged conflict could force central banks to delay rate cuts, affecting global liquidity and asset valuations.
Investors should monitor the Fed’s response to inflationary pressures and potential sanctions on Iranian oil exports. Technical levels to watch include $4,400 and $4,500 for gold, while oil traders may focus on $105 as a key resistance. Regional investors in the Gulf may also assess how energy price volatility impacts local markets and currency stability.
