Gold prices fell on Monday but traded above their session lows as an escalation in the U.S.-Israel war with Iran spurred flows into the dollar and oil. 

Bullion prices remained well above $5,000 an ounce as heightened geopolitical tensions kept investors biased towards safe havens. 

Spot gold fell 1% to $5,117.23/oz by 05:20 ET (09:20 GMT), while gold futures fell 0.7% to $5,124.66/oz. 

Spot gold had fallen as low as $5,015.23/oz earlier in the day. 

Gold remains well above $5,000/oz as Iran conflict drives haven bids

While the yellow metal has benefited from increased haven demand with the onset of the U.S.-Israel war with Iran, its gains have been tempered by concerns that the inflationary effects of the war could elicit a more hawkish stance from major global central banks.

This saw the dollar outpace gold over the past week, while oil prices led commodity gains as the Iran war pointed to increased supply disruptions in crude markets. 

Both the dollar and oil surged on Monday after U.S. and Israeli strikes on Iran’s oil facilities marked a potential escalation in the war. The dollar index jumped 0.6%, while Brent oil rallied as much as 30% and blew past $100 a barrel. 

Oil tempered some of its gains after the Financial Times reported the G7 countries were considering releasing their emergency reserves in the face of supply disruptions. 

Separately, Bloomberg reported that Saudi Arabian producers were offering oil on spot markets, a rare move by the country. 

Iran over the weekend was seen attacking ships in the Strait of Hormuz, essentially blocking a shipping lane that accounts for roughly 20% of the world’s oil supplies. 

Gold had fallen some 2% last week, as the yellow metal continued to flit between $5,000/oz and a near $5,600/oz record high hit in late-January. The metal has since logged wild swings amid heightened speculative activity and growing uncertainty over the path of interest rates. 

Substantially softer than expected U.S. nonfarm payrolls data on Friday did spur some hopes for lower interest rates, although focus is now on the inflationary effects of high oil prices. 

Silver recovers after falling below $80/oz 

Other precious metal prices also broadly fell on Monday, with silver briefly falling below $80/oz.

But spot silver recouped a bulk of its losses and traded down 0.6% at $83.8025/oz. 

Spot platinum slid fell 0.6% to $83.8060/oz, also trading well above intraday lows. 

Like gold, the two precious metals have swung wildly since a major crash in late-January. But their relatively strong haven appeal and hopes of more industrial demand saw silver and platinum still trading higher for the year. 

Among industrial metals, copper futures fell 0.4% to $12,817.0 a ton.