U.S. Inflation Data Below Expectations Sends Gold Down as Military Prepares for Iran Operations

Gold prices declined slightly on Monday as the dollar strengthened following a more than 2% surge in the previous session, driven by cooler-than-expected U.S. inflation data that has heightened expectations of Federal Reserve rate cuts.

Spot gold fell 0.4% to $5,020.10 per ounce by 0111 GMT after rising 2.5% in the prior trading session. U.S. gold futures for April delivery dropped 0.1% to $5,039.50 per ounce.

The U.S. dollar index rose on Monday, making greenback-priced bullion more expensive for holders of other currencies.

The U.S. Consumer Price Index increased by 0.2% in January, falling short of economists’ projections for a 0.3% rise and following an unrevised 0.3% gain in December, according to the Labor Department. Lower inflation typically boosts the likelihood of interest rate reductions.

Market participants currently anticipate a total of 75 basis points in Federal Reserve rate cuts this year, with the first expected in July, based on data compiled by LSEG.

Non-yielding bullion often performs well in low-interest-rate environments.

Meanwhile, the U.S. military is preparing for sustained, weeks-long operations against Iran should President Donald Trump order an attack, according to two U.S. officials. This readiness could escalate tensions into a conflict far more serious than previously anticipated between the nations.

Israeli Prime Minister Benjamin Netanyahu stated on Sunday that he informed U.S. President Donald Trump last week that any U.S. deal with Iran must include the dismantling of Iran’s nuclear infrastructure, not merely halting enrichment activities.

Spot silver declined 0.6% to $76.92 per ounce after rising 3% in Friday’s trading. Spot platinum slid 0.4% to $2,054.35 per ounce, while palladium increased 0.4% to $1,692.23.