Gold prices were steady on Monday after paring a near 1% fall earlier in the session, as a softer dollar and safe-haven demand helped offset waning hopes of near-term U.S. interest rate cuts due to elevated energy prices.
Spot gold edged up 0.2% to $5,027.98 per ounce, as of 0427 GMT, recovering from a more than three-week low hit earlier in the session. U.S. gold futures for April delivery fell 0.6% to $5,031.60.
The U.S. dollar nudged lower, making greenback-priced commodities, such as bullion, cheaper for holders of other currencies.
U.S. 10-year Treasury yields eased, increasing the appeal of non-yielding bullion.
"Gold prices are holding broadly steady as the market navigates competing macro forces. Safe-haven demand amid ongoing geopolitical tensions continues to lend support, but rising oil prices have also revived inflation concerns," said Christopher Wong, a strategist at OCBC.
Oil remained above $100 a barrel as the U.S.-Israeli war against Iran entered a third week, putting oil infrastructure at risk and keeping the Strait of Hormuz shut in the biggest disruption to global supplies ever.
Higher crude prices feed into inflation by raising transportation and production costs. Gold is considered an inflation hedge, but high interest rates make yield-bearing assets more attractive, weighing on its appeal.
"In the near term, (gold's) price action may remain choppy as markets reassess the Fed policy path and the trajectory of real yields," Wong said.
The Federal Reserve is widely expected to hold interest rates steady for a second straight meeting on Wednesday. Meanwhile, President Donald Trump said on Sunday his administration is talking to seven countries about helping to secure the Strait of Hormuz. Trump also threatened more strikes on Iran's main oil export hub, Kharg Island, and said he was not ready to reach a deal to end the war.
Spot silver fell 0.3% to $80.33 per ounce. Spot platinum gained 1.7% to $2,059.21 and palladium rose 1.2% to $1,569.99. - Reuters
