Spot Gold Prices Fall 1.1% to $4,236.33 Per Ounce Monday
- Spot gold prices fell 1.1% to $4,236.33 per ounce early Monday, extending a weekly slide driven by surging oil prices and strong U.S.
- Oil prices climbed after Iran announced it would not soften its conditions to reopen the Strait of Hormuz, maintaining uncertainty around a vital global energy corridor.
- Federal Reserve officials voted unanimously in mid-September to raise the benchmark interest rate by 25 basis points, and several policymakers have since signaled that an additional rate hike...
Spot gold prices fell 1.1% to $4,236.33 per ounce early Monday, extending a weekly slide driven by surging oil prices and strong U.S. economic activity data that reinforced expectations of prolonged high interest rates from the U.S. Federal Reserve. Silver prices dropped 1.2% to $4,270.50, while platinum fell 1.7% to $63.24 and palladium decreased 1.3% to $1,758.04, according to Investing.com market data.
Strait of Hormuz Tensions Fuel Energy Costs and Inflation Concerns
Oil prices climbed after Iran announced it would not soften its conditions to reopen the Strait of Hormuz, maintaining uncertainty around a vital global energy corridor. U.S. President Donald Trump rejected an Iranian proposal to reopen the waterway within seven days, though he indicated expectations that negotiations with Tehran would resume during the week. The U.S.-Iran conflict has entered its eighth month, with oil prices rising about 70% since the start of the year. Persistent high energy costs add to inflation fears and serve as a central factor for markets assessing upcoming Federal Reserve policy moves. Cleveland Federal Reserve Bank President Beth Hamak noted that long-term Treasury yields are being pushed higher by strong growth expectations, government debt concerns, and interest rate hike expectations.
Bond Market Pressures and Federal Reserve Policy Expectations
Federal Reserve officials voted unanimously in mid-September to raise the benchmark interest rate by 25 basis points, and several policymakers have since signaled that an additional rate hike could be necessary. Markets previously priced in a roughly 65% probability of another increase in October. Additional downward pressure on gold stemmed from the bond market, where the yield spread between the two-year and longer-term Treasury securities narrowed to just 17 basis points last week, marking the tightest gap since early 2025. U.S. Treasury Secretary Scott Bessent urged the Federal Reserve to maintain flexibility regarding interest rates, arguing that productivity gains driven by artificial intelligence and deregulation could help curb inflation. Meanwhile, U.S. consumer confidence fell in September to a four-month low amid mounting concerns over prices and the economy.
Gold Prices Hold Below January Peak as ETF Demand Remains Resilient
Gold traded in a relatively narrow range between $4,230 and $4,510 during the month as investors repeatedly reassessed Federal Reserve policy outlooks. Prices remain far below the record peak of about $5,600 reached in January. ANZ reported that the macroeconomic environment remains difficult for gold, with high yields and a strong dollar weighing on prices. However, the bank noted that demand for exchange-traded funds remained solid, with holdings in gold ETFs rising by about 50 tons so far this month.