Gold prices fall as the strength of the dollar offsets the risk premium in the Middle East.

Gold fell back after four consecutive days of gains, as traders weighed escalating tensions in the Middle East against a stronger US dollar and prospects of increasing inflation. The price of gold dropped more than 4.5% after rising 1.1% previously. The conflict in the Middle East has caused energy prices to surge, which could potentially lead to inflation data and increase the likelihood of the Federal Reserve keeping interest rates unchanged for a longer period. Silver prices also fell by up to 12.8%. The US dollar index has risen by approximately 1.5% so far this week, and the 2-year US Treasury yield saw its largest increase in months on Monday. Traders are now factoring in expectations of a rate cut by the end of September, later than previously anticipated.