Gold Inflation Pressure

Gold Prices Slip as Oil Rally Fuels Fed Rate Concerns Ahead of US Inflation Data

Investing.com – Gold prices extended their decline on Monday as renewed military strikes involving the United States and Iran over the weekend pushed crude oil prices higher, reigniting inflation concerns and reinforcing expectations that the Federal Reserve could maintain a hawkish monetary policy for longer.

As of 12:05 WIB (05:05 GMT), spot gold (XAU/USD) fell 1.54% to $4,057.76 per ounce, while Gold Futures dropped 1.17% to $4,065.45 per ounce. Silver (XAG/USD) declined 2.80% to $58.19 per ounce, and platinum (XPT/USD) slipped 1.61% to $1,604.60 per ounce.

Middle East Conflict Drives Oil Higher and Revives Inflation Risks

Geopolitical tensions intensified over the weekend after the United States launched fresh strikes on Iranian targets following an attack on a Cyprus-flagged cargo vessel in the Strait of Hormuz. While Tehran announced that the strategic shipping route would remain closed until further notice, U.S. officials rejected the claim, underscoring the fragile state of ceasefire negotiations.

Oil prices remained sharply elevated after surging nearly 3%, reflecting investor concerns that escalating conflict could disrupt crude shipments through the Strait of Hormuz, a vital passage responsible for roughly 20% of global oil supplies.

The continued rise in energy prices has revived fears of another inflationary shock, increasing expectations that the Federal Reserve may keep interest rates higher for longer. Higher bond yields and a stronger U.S. dollar typically reduce the appeal of non-yielding assets such as gold.

Minutes from the Fed's June policy meeting, released last week, revealed that several policymakers still see a case for additional rate hikes, while many officials expressed greater concern over persistent inflation despite easing worries about the labor market. The Federal Reserve's next policy meeting is scheduled for July 28–29.

US CPI Report and Fed Testimony in Focus

Investors are now turning their attention to Tuesday's U.S. Consumer Price Index (CPI) report and the first congressional testimony by Federal Reserve Chair Kevin Warsh, both of which are expected to provide fresh clues on the future direction of U.S. interest rates.

According to Tony Sycamore, Market Analyst at IG, gold remains highly sensitive to both geopolitical developments and incoming U.S. inflation data.

Sycamore noted that gold found strong support near the key psychological $4,000 level last week. If prices can establish a sustained move above the $4,200–$4,220 resistance zone, it could pave the way for a broader recovery toward the 200-day moving average near $4,491.

However, he cautioned that a stronger-than-expected CPI reading could reinforce expectations for another Federal Reserve rate hike before the end of the year, boosting the U.S. dollar and placing additional downward pressure on bullion. Conversely, softer inflation data could help stabilize gold after its recent losses.

Meanwhile, the U.S. Dollar Index (DXY) edged 0.3% higher on Monday, adding further pressure on dollar-denominated gold prices.

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Gold Weekly Loss

Gold Prices Head for Weekly Loss as US-Iran Tensions Weigh on Market Sentiment

Gold prices remained largely unchanged on Friday but were on track to post a weekly loss as escalating military tensions between the United States and Iran fueled concerns over rising inflation and higher interest rates.

Meanwhile, silver and platinum were also expected to end the week lower, pressured by surging oil prices and a stronger U.S. dollar, which recovered from last week's losses.

Spot gold was little changed at $4,125.03 per ounce, while gold futures slipped 0.1% to $4,135.67 per ounce as of 09:11 GMT. The precious metal has fallen approximately 1.6% this week, reflecting cautious investor sentiment.

Gold markets have been shaken by a series of U.S. military strikes on Iran, which triggered a sharp rally in global crude oil prices. Rising geopolitical tensions have heightened concerns that energy-driven inflation could remain elevated, complicating the outlook for global monetary policy.

U.S. President Donald Trump announced that the ceasefire with Iran had ended and ordered additional military operations against the country, prompting retaliatory action from Tehran. Although an Axios report indicated that regional mediators are attempting to preserve a recently negotiated U.S.-Iran memorandum of understanding, prospects for lasting peace in the Middle East remain highly uncertain.

The surge in oil prices has intensified fears of higher inflation, increasing expectations that the Federal Reserve may maintain a more hawkish policy stance. According to the CME FedWatch Tool, markets have continued to price in greater odds of Federal Reserve interest rate hikes in 2026.

Higher interest rates typically weigh on non-yielding assets such as gold because they increase the opportunity cost of holding bullion compared with interest-bearing investments.

Other precious metals also posted weekly declines despite modest gains on Friday. Spot silver rose 0.5% to $60.2550 per ounce but remained down 4.1% for the week. Spot platinum climbed 1.2% to $1,636.14 per ounce, although it was still down 0.4% on a weekly basis.

Investors are expected to remain focused on developments in the Middle East, movements in oil prices, and upcoming U.S. economic data, all of which could influence the Federal Reserve's policy outlook and the near-term direction of gold prices.

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Gold Rebounds Higher

 

Gold Rebounds Toward $4,100 but Struggles to Gain Momentum Amid Inflation Concerns

Gold prices rebounded toward the $4,100 level on Thursday, snapping a three-day losing streak. However, the recovery remained limited as renewed geopolitical tensions in the Middle East reignited global inflation concerns, reducing expectations for aggressive monetary policy easing by major central banks.

The XAU/USD pair traded around $4,056, maintaining a bearish short-term outlook as spot gold remained below the 20-day Exponential Moving Average (EMA) at $4,149.09. Trading beneath this key technical indicator suggests that bullish momentum remains weak despite the latest rebound.

Meanwhile, the Relative Strength Index (RSI) stood at 40.11, remaining in mildly negative territory. Although the indicator does not point to oversold conditions, it continues to signal persistent selling pressure in the gold market.

On the upside, immediate resistance is located at the 20-day EMA of $4,149.09. A sustained breakout above this level would be needed to ease the current bearish sentiment and could open the door for a move toward the $4,200 resistance area.

On the downside, if gold falls below the June 30 low of $3,941.76, the precious metal could extend its decline toward the $3,800 support zone.

Fed Rate Expectations Shift as Inflation Risks Rise

Market participants have increasingly priced in the possibility of persistent inflation, according to the CME FedWatch Tool. The probability that the Federal Reserve will leave interest rates unchanged this year declined to 14.9%, down from 19.4% recorded on Tuesday, reflecting growing expectations that policymakers may need to maintain a hawkish stance.

Geopolitical tensions also continued to influence investor sentiment. On Wednesday, the US Central Command confirmed it had launched fresh military strikes against Iran aimed at keeping the Strait of Hormuz—a critical shipping route for nearly 20% of global energy supplies—open for international transit.

The renewed military action followed US President Donald Trump's announcement that the memorandum of understanding (MoU) signed with Iran to end the Middle East conflict was no longer in effect, further escalating uncertainty across global financial markets.

Looking ahead, investors will closely monitor upcoming US economic data for fresh evidence on inflation trends and their potential impact on the Federal Reserve's monetary policy outlook.

Minutes from the Federal Open Market Committee (FOMC) June policy meeting, released on Wednesday, revealed that policymakers continue to view inflation as the primary economic risk. Several Fed officials also indicated that additional monetary tightening could still become necessary if inflation remains persistently above the central bank's long-term target.

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