Gold fell more than 3% on Monday, sliding below $4,200 an ounce as elevated oil prices, rising Treasury yields and bets on another Federal Reserve rate hike weighed on bullion. Silver and platinum dropped alongside gold, while the U.S. Dollar Index edged higher.
Gold extended a sharp weekly decline on Monday, dropping more than 3% as oil prices, Treasury yields and expectations for further Fed tightening kept pressure on the metal. Spot gold, XAU/USD, fell 3.3% to $4,146.12 an ounce, while Gold Futures dropped 3.3% to $4,178.05.
Silver and platinum fell in tandem. XAG/USD dropped 5.12% to $61.02, while XPT/USD declined 3.2% to $1,725.01. The dollar added to the pressure as the U.S. Dollar Index rose 0.1% to 101.09.
Hormuz standoff keeps oil and Fed policy in focus
Oil prices rose after Iran said it would not soften its conditions for reopening the Strait of Hormuz. President Donald Trump rejected Iran's seven-day proposal to reopen the waterway, though he said he expects negotiations with Tehran to resume this week.
The U.S.-Iran conflict is now entering its eighth month, and Brent crude has risen about 70% this year. Elevated energy prices are adding to inflation concerns and have become an important factor for markets assessing the Federal Reserve's next moves. Cleveland Fed President Beth Hammack said long-term Treasury yields are being pushed higher by stronger growth expectations, concerns over government debt and expectations for additional interest rate increases.
Fed officials voted unanimously in mid-September to raise the benchmark rate by 25 basis points, and several policymakers have since indicated that further increases could be necessary. Markets were pricing about a 65% probability of another rate hike in October. The bond market added to the pressure, as the yield spread between 10-year and two-year Treasuries narrowed to as little as 17 basis points last week, the smallest gap since early 2025.
ETF demand holds up even as prices break lower
Gold's slide below $4,200 pushed spot prices under the previous $4,230-$4,510 range cited by markets, though bullion remains well below the record high of almost $5,600 reached in January. ANZ said the macro backdrop remains challenging for gold, with higher yields and a stronger dollar weighing on prices.
However, the bank noted that exchange-traded fund demand has remained firm, with gold ETF holdings rising by about 50 tonnes so far this month. Meanwhile, U.S. consumer sentiment fell to a four-month low in September as concerns over prices and the economy increased. U.S. Treasury Secretary Scott Bessent urged the Fed to remain open-minded on interest rates, arguing that productivity gains driven by artificial intelligence and deregulation could help contain inflation.
Markets will next focus on Wednesday's August PCE inflation data and Friday's September jobs report, with the Fed's preferred inflation gauge and payroll growth set to provide fresh clues on the path for further rate hikes.
Source: Commodities & Futures News
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