Gold prices fell over the weekend following a ship firing incident in the Strait of Hormuz, reigniting market concerns over potential energy supply disruptions. Early trading saw gold drop to around $4,770 per ounce. U.S. President Donald Trump stated that the U.S. Navy fired upon and seized an Iranian-flagged cargo vessel, while Tehran warned that any ships approaching the strait would be considered in violation of the ceasefire agreement. Just hours after Iran announced the reopening of the strait, multiple vessels were forced to turn back and abandon passage. The latest incident has undermined prospects for potential peace talks. While Trump indicated there was an opportunity for an agreement, he also renewed threats to destroy Iranian power plants and bridges. Iran, in response, described the outlook for a deal as "unclear." U.S. stock index futures declined, and the Bloomberg Dollar Spot Index rose by as much as 0.3%, putting pressure on dollar-denominated gold prices. In recent weeks, the failure to reach a lasting diplomatic solution to end the conflict has heightened market volatility, and the recent events have again highlighted the fragility of the ceasefire agreement set to expire on Tuesday. The prolonged conflict has triggered an unprecedented energy supply shock, exacerbating inflationary pressures and increasing the likelihood that central banks will keep interest rates steady or even raise them—a negative development for non-yielding assets like gold. Since the outbreak of the war in late February, gold prices have fallen by approximately 9%. As of 7:30 Singapore time, spot gold was down 1.3% at $4,769.95 per ounce. Silver fell 2% to $79.31 per ounce, while platinum and palladium also traded lower. The Bloomberg Dollar Spot Index advanced 0.2%.
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