Gold is no match for the dollar as the Iran conflict rages on.

Gold prices were sliding on Monday as an escalating Iran conflict drove fears of sticky inflation, and investors again took shelter in the dollar.

Oil prices climbed above $100 a barrel on Monday, reaching levels not seen since 2022, as the conflict showed no signs of de-escalating, adding to growing concerns of a lasting supply shock.

Gold futures (GC00) (GCJ26) fell $56.90, or 1.1%, to $5,101.80 an ounce, after rising 1.6% on Friday, but lost that same amount last week. That marked the biggest one-week percentage decline since the week ending Jan. 30. Silver prices (SI00) fell 47 cents, or 0.5%, to $83.82 an ounce. Silver lost nearly 10% last week, also marking its worst week since Jan. 30.

Investors were flocking to the dollar, with the ICE Dollar Index DXY up 0.3% to 99.29. That came as Dow futures (YM00) pointed to a loss of more than 600 points when the market opens later, and investors continued to flee bonds, with the yield on the 10-year Treasury BX:TMUBMUSD10Y note up 5 basis points to 4.183%.

Gold has been moving lower on the belief that soaring oil prices will weigh on inflation and reduce chances of interest-rate cuts from the Federal Reserve, noted strategists at Saxo Bank. As gold offers no yield, it is less attractive than yield-bearing assets if interest rates stay higher.

However, Saxo said this view may be "misplaced as the current price surge reflects a supply shock, not stronger demand, raising the risk of stagflation that could ultimately force central banks to provide economic support." It added: "In the short term, deleveraging and a stronger dollar, may weigh on prices without removing the underlying reasons investors have increasingly been flocking to hard assets in recent years."

Rania Gule, senior market analyst at multi-asset broker XS.com, told clients that gold remains supported by stubbornly high global debt, geopolitical volatility and central-bank demand. Therefore, any downward price correction could be a chance to buy, especially if the precious metal nears $4,995 to $5,000 an ounce, the analyst said.

Analysts have also been discussing reports that gold flows are being disrupted by the conflict, with the precious metal reportedly selling at a deep discount in Dubai, as planes are unable to take off in the important trading hub.