Spot gold was down 0.8% at $5,130.94 per ounce

Gold dropped on Monday, as a stronger U.S. dollar ‌weighed on dollar-priced bullion, while higher energy costs fuelled inflation concerns and further dimmed the prospects for near‑term reductions in interest rates.

Spot gold was down 0.8% at $5,130.94 per ounce, as of 0554 GMT, after dropping ​more than 2% earlier in the session.

The dollar rose to a more-than-three-month high, making bullion ⁠more expensive for holders of other currencies.

The U.S. 10‑year Treasury yields jumped to a one-month ​high, raising the cost of holding non‑yielding gold.

Gold is on the back foot today despite ​the market tumult, with triple-digit oil prices boosting the dollar on inflation fears and scaled back rate-cutting expectations, said Tim Waterer, KCM Trade chief market analyst.

Crude oil prices surged more than 20% to above $110 per barrel ​as the expanding U.S.-Israeli war with Iran led some major Middle Eastern oil producers ​to cut supplies amid fears of prolonged disruption to shipping through the Strait of Hormuz.

Much of gold’s price ‌rise ⁠over the last 12 months was predicated on a dovish outlook for U.S. interest rates, but given the inflation risk presented by $100 per barrel oil, rate cuts are no longer a given and gold has repriced accordingly, Waterer said.

Bullion tends to thrive in a ​low-interest-rate environment as ⁠it is a non-yielding asset.

Investors expect the U.S. central bank to keep ​interest rates steady at ​the end of ⁠its two-day meeting on March 18, as per CME Group’s FedWatch tool. The odds of a June hold, which were below 43% last ​week, climbed to more than 51%.

Bullion tends to thrive in a ​low-interest-rate environment as ⁠it is a non-yielding asset.