Gold Rebounds Slightly

 

Gold Prices Edge Higher After 4% Plunge as US Data Takes Center Stage

Gold prices edged higher on Tuesday but remained close to a seven-week low as the standoff between the United States and Iran over the Strait of Hormuz kept energy prices elevated and strengthened expectations for further Federal Reserve interest rate hikes.

At 17:33, spot gold rose 0.6% to $4,139.91 per troy ounce, while gold futures gained 0.1% to $4,171.90 per troy ounce.

Oil prices continued to rise as Iran maintained its conditions for reopening the Strait of Hormuz. Concerns are growing that persistently high oil prices could fuel inflation and encourage central banks to maintain or extend their monetary tightening cycles. This could, in turn, reduce the appeal of non-yielding assets such as gold.

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Iranian officials have reportedly expressed pessimism over the possibility of reaching an agreement with Washington to end hostilities before the US midterm elections in November. The development came after President Donald Trump rejected Tehran's latest proposal to reopen the strategic waterway within seven days.

The US-Iran conflict has now entered its eighth month, continuing to disrupt global energy flows and fuel concerns over inflation.

The renewed rise in oil prices also exacerbated the sell-off in US Treasury bonds on Monday, further weighing on gold. The 10-year US Treasury yield climbed to its highest level in 19 years, increasing the opportunity cost of holding gold, which does not pay interest. Gold prices plunged 4% on Monday.

Over the past month, gold has fallen around 7%. The decline has come amid the Fed's first interest rate hike since 2023, while policymakers have continued to leave the door open to additional increases. Markets are now pricing in roughly a 70% probability of another rate hike in October.

ANZ analysts said the short-term macroeconomic backdrop remains challenging for gold, as higher yields and persistent inflation risks continue to weigh on the precious metal.

Markets will next turn their attention to the Personal Consumption Expenditures (PCE) inflation report due Wednesday, the Fed's preferred inflation gauge, followed by the nonfarm payrolls report on Friday. Both releases could provide fresh clues about the Federal Reserve's interest rate path.

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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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