Gold prices are set to record their sharpest monthly fall in more than 17 years, as investors shifted towards the US dollar as the preferred safe haven. Gold is generally viewed as a safeguard against inflation and global uncertainty.

Globally, bullion has dropped by over 13 per cent this month, putting it on course for its steepest decline since 2008. Even though prices are still up nearly 5% for the quarter after touching a record high of $5,594.82 on January 29, they have now fallen 18.70% from that peak. Check the latest gold prices here.

Higher energy costs linked to the West Asia tensions have also strengthened expectations of increased interest rates, making the US dollar more attractive to investors, news agency Reuters reported.

Meanwhile, the US dollar index touched its highest level since last May on Monday at 100.61. It was last recorded at 100.47, marking a 2.9% rise through March, its biggest monthly gain since July.

The conflict has unsettled global markets, particularly after Iran responded to US-Israeli strikes by nearly blocking the Strait of Hormuz, a crucial route that handles close to one-fifth of the world’s crude supply.

Tim Waterer, chief market analyst at KCM Trade, told the news agency, “If the Strait of Hormuz remains closed, oil prices could remain volatile with potential for further upside on supply constraints. So, this high oil story, which has plagued gold prices since the conflict began, hasn’t gone away yet.”

However, Goldman Sachs expects gold prices to reach $5,400 per troy ounce by the end of the year, supported by central bank diversification and possible easing by the Federal Reserve.

Recent data showed slight price differences across cities, with Noida and Chennai seeing marginally higher rates than Delhi and Bengaluru.

With inputs from agencies