Gold prices rise amid easing bond yields, simmering Iran tensions

Gold prices moved higher on Monday amid choppy trading, as investors kept tabs on an easing sell-off in global bonds and sliding oil prices.

By 10:02 ET (14:02 GMT), spot gold had risen by 0.7% to $4,570.60 an ounce, while gold futures had dropped by 0.3% to $4,574.20 an ounce. The price of the yellow metal slumped to its lowest level since March 30 earlier in the session.

Global bond yields retreated, as a rout in government debt that roiled financial markets in recent days showed signs of easing despite ongoing tensions in the Middle East. Oil prices turned lower as well, after Iranian media reported that the U.S. had proposed a temporary waiver on oil sanctions imposed on the country until a final peace deal between Washington and Tehran is reached.

Still, bullion has retreated compared to its level at the start of the Iran war in late February, as traders have flocked to the U.S. dollar as a safe-haven asset, buoyed by the view that the American economy -- as a major energy exporter -- may be insulated from an energy shock sparked by the conflict. A stronger dollar can make gold more expensive for overseas buyers.

At the same time, worries over a surge in inflationary pressures due to the war have also dented gold’s appeal. Central banks can react to faster price gains by raising interest rates, which can make non-yielding assets like gold less appealing.

Over the weekend, a drone attack caused a fire at a nuclear facility in the United Arab Emirates, while Saudi Arabia said it had intercepted three drones. The developments cast fresh doubt around a fragile ceasefire between Washington and Tehran, with President Donald Trump writing on social media that "the clock is ticking" for Iran to reach a peace agreement. He seemed to suggest that the U.S. could renew military action should no deal be forged.

Some investors were hopeful last week that Trump may be able to secure a breakthrough in the impasse with Iran during a visit to China, a key importer of Iranian oil. However, the summit did not yield any immediate commitments from Beijing.

"The weekend [...] saw a return of concerns over the ongoing war between the U.S. and Iran," said David Morrison, Senior Market Analyst at Trade Nation, in a note.

"These fell out of focus while the Trump administration was in Beijing. But they bounced back into sight as it became painfully apparent that the Chinese trip was a non-event, while Iran appears in no mood to accede to the U.S. peace plan."