Gold Price Pressured

Gold Falls Below $4,300 as Surging Oil Prices and Fed Rate Hike Expectations Weigh on Market

Gold prices extended their losses on Monday after posting a decline of more than 2% last week, as elevated oil prices and stronger-than-expected U.S. economic data reinforced expectations that the Federal Reserve could keep interest rates higher for longer.

As of 12:39 WIB, spot gold (XAU/USD) dropped 2.3% to $4,188.84 per ounce, while Gold Futures fell 2.3% to $4,221.12. Silver (XAG/USD) declined 4.1% to $61.65, and platinum (XPT/USD) slipped 3% to $1,727.90. Meanwhile, the U.S. Dollar Index (DXY) edged up 0.1% to 101.11.

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Hormuz Strait Standoff Keeps Oil Prices and Fed Policy in Focus

Oil prices moved higher after Iran reiterated that it would not ease its conditions for reopening the Strait of Hormuz, maintaining uncertainty around one of the world’s most critical energy supply routes. U.S. President Donald Trump rejected Iran’s seven-day proposal to reopen the waterway, although he expressed hope that negotiations with Tehran could resume later this week.

The U.S.-Iran conflict has now entered its eighth month, while Brent crude oil has surged roughly 70% year-to-date. Persistently high energy prices continue to fuel inflation concerns and remain a key factor influencing expectations for future Federal Reserve policy decisions.

Cleveland Federal Reserve President Beth Hammack said long-term Treasury yields have been pushed higher by stronger growth expectations, concerns over government debt levels, and the possibility of additional interest rate increases.

Federal Reserve officials unanimously approved a 25-basis-point rate hike in mid-September, and several policymakers have since signaled that further tightening may still be necessary. Markets are currently pricing in approximately a 65% probability of another rate increase in October.

Gold also faced pressure from the bond market. The spread between the 10-year Treasury yield and the 2-year Treasury yield narrowed to just 17 basis points last week, marking the smallest gap since early 2025.

Gold Remains Below January Record Despite Steady ETF Demand

Gold has traded within a relatively narrow range between $4,230 and $4,510 this month as investors repeatedly reassess the outlook for Federal Reserve policy. The precious metal remains well below its record high near $5,600, reached in January.

Analysts at ANZ noted that the macroeconomic backdrop remains challenging for gold, with higher Treasury yields and a stronger U.S. dollar continuing to weigh on prices. However, the bank highlighted that demand for gold-backed exchange-traded funds (ETFs) remains robust, with ETF holdings increasing by approximately 50 tons so far this month.

Meanwhile, U.S. consumer sentiment weakened in September, falling to its lowest level in four months amid growing concerns about rising prices and economic conditions.

U.S. Treasury Secretary Scott Bessent has also urged the Federal Reserve to remain flexible on interest rate policy. He argued that productivity gains driven by artificial intelligence and deregulation could help contain inflationary pressures.

Key Economic Data in Focus This Week

Investors are now turning their attention to several major U.S. economic releases that could shape expectations for future Federal Reserve actions. The market will closely monitor the August PCE inflation report on Wednesday and the September employment report on Friday.

As the Fed’s preferred inflation gauge and a key measure of labor market strength, these reports are expected to provide fresh clues on whether additional interest rate hikes remain on the table and how they could impact the outlook for gold prices.

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Gold Eyes Losses

Gold Holds Near $4,275, Heads for Weekly Loss as Fed Rate Hike Expectations Grow

Gold prices were little changed on Friday and remained on track for a weekly decline of more than 3%, as elevated energy prices and rising U.S. Treasury yields continued to reinforce expectations of further Federal Reserve policy tightening.

As of 10:41 GMT, spot gold (XAU/USD) was nearly unchanged at $4,274.89 per ounce, while Gold Futures gained 0.3% to $4,309.72. Silver (XAG/USD) slipped 0.1% to $63.79, and platinum (XPT/USD) edged down 0.1% to $1,754.17. Meanwhile, the U.S. Dollar Index climbed 0.1% to 101.29.

Hormuz Uncertainty Keeps Oil and Inflation Risks in Focus

Oil prices stabilized after surging on Thursday as the United States and Iran remained unable to reach a final agreement on reopening the Strait of Hormuz, a critical route for global energy supplies.

Reports indicate that negotiators are exploring a phased deal that would allow Tehran to reopen the strategic waterway while Washington eases port restrictions. The possibility of continued disruptions to energy flows has supported oil prices and fueled concerns that higher fuel costs could slow the decline in inflation.

The energy market remains a key factor for gold traders, who are assessing whether renewed inflationary pressure from rising oil prices could push the Federal Reserve toward additional monetary tightening following last week’s interest rate increase—the first rate hike in three years.

Higher interest rates and Treasury yields typically weigh on gold because the precious metal does not generate interest income. U.S. bond yields rose sharply on Thursday, with the 30-year Treasury yield approaching 5.5%, its highest level in more than two decades.

The rise in yields has also strengthened expectations that borrowing costs could remain elevated for longer, creating additional headwinds for non-yielding assets such as gold.

Investment Demand Remains Resilient Despite Macro Headwinds

According to analysts at ANZ, investment demand for gold has remained resilient, with no significant liquidation observed so far despite increasingly challenging macroeconomic conditions.

This suggests that the recent decline in gold prices has not triggered widespread investor exits, highlighting continued confidence in the metal as a long-term store of value.

However, the short-term outlook for gold remains closely tied to movements in oil prices, Treasury yields, and expectations surrounding the Federal Reserve’s next policy decision.

Further increases in energy costs could keep inflation concerns elevated, while higher yields and a stronger U.S. dollar are likely to continue exerting pressure on gold prices.

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Gold Price Pressure

Gold Prices Edge Lower as Rising Oil and Treasury Yields Weigh on Bullion

Gold prices slipped on Thursday following a sharp selloff in the previous session, as higher oil prices, a stronger U.S. dollar, and rising Treasury yields continued to pressure the precious metal. Investors are also reassessing the likelihood of further Federal Reserve interest rate hikes amid persistent inflation concerns.

As of 12:58 WIB, spot gold (XAU/USD) was down 0.2% at $4,281.13 per ounce, while U.S. gold futures declined 0.1% to $4,315.55. Silver fell 0.6% to $64.09 per ounce, while platinum gained 0.3% to $1,758.69 and palladium advanced 0.4% to $1,273.79. The U.S. Dollar Index remained largely unchanged at 101.13.

Oil Prices Rise as Iran Tensions Cloud Peace Prospects

Gold remains highly sensitive to Federal Reserve policy expectations, with investors closely monitoring whether elevated energy prices could keep inflation high enough to justify additional interest rate increases. Higher rates typically weigh on gold because the metal does not generate yield.

Oil prices moved higher after Iranian President Masoud Pezeshkian told the United Nations that Iran would not allow unrestricted navigation through the Strait of Hormuz while U.S. sanctions and blockades remain in place.

His remarks highlighted the challenges facing diplomatic efforts between Tehran and Washington, despite renewed negotiations taking place this week.

Pezeshkian reiterated that Iran remains open to negotiations but would not respond to threats. He also stated that Tehran is not pursuing nuclear weapons while emphasizing that the country will not abandon its right to develop nuclear technology for economic purposes.

The comments came a day after U.S. President Donald Trump said American officials had held “very good” discussions with Iranian representatives on the sidelines of the United Nations summit.

Gold has fallen roughly 20% since the outbreak of the U.S.-Iran conflict in late February, with energy prices and Federal Reserve policy expectations remaining the primary drivers of market sentiment.

Strong U.S. Data and Treasury Selloff Reinforce Rate Pressure

The U.S. Treasury market remained under pressure following stronger-than-expected economic data and weak government debt auctions. The move has strengthened expectations that inflation could remain elevated, pushing yields across much of the curve to their highest levels in nearly two decades.

The benchmark U.S. five-year Treasury yield climbed above 5% for the first time since 2007, creating an additional headwind for non-yielding assets such as gold.

Meanwhile, U.S. business activity expanded at its fastest pace in more than five years. Federal Reserve Governor Michael Barr indicated that further interest rate increases may be necessary to bring inflation back to the central bank’s 2% target. His comments echoed similar warnings from other policymakers who continue to view inflationary pressures as persistent.

Interest-rate swaps now suggest markets are pricing in at least three additional Federal Reserve rate hikes by April next year, a notable increase from expectations earlier this week.

Gold Outlook Remains Challenging

Despite near-term weakness, gold continues to receive support from long-term demand fundamentals. However, stronger economic growth, rising Treasury yields, elevated oil prices, and a firmer U.S. dollar are currently limiting the precious metal’s upside potential and keeping pressure on bullion prices in the short term.

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