Asian trading saw gold weaken on Monday as markets digested renewed U.S.-Iran strikes over the weekend and continued to price in higher interest rates. The move came despite reports that both parties had agreed to halt attacks and planned to meet for additional talks later this week.
Price moves - Spot gold fell 0.8% to $4,055.50 an ounce by 21:14 ET (01:14 GMT), while gold futures declined 0.7% to $4,069.25 an ounce. These drops followed a near eight-month low for the metal recorded last week, reflecting growing concerns that the U.S. Federal Reserve could raise interest rates later this year.
Market drivers - The recent U.S.-Iran peace agreement had eased some inflation fears tied to energy markets, with oil prices having fallen sharply and returned to pre-war levels over the past week. Nevertheless, bullion remained under downward pressure from a strong U.S. dollar and high Treasury yields.
Markets were also reacting to inflation indicators and central bank signalling. Strong U.S. inflation data added to the prospect of further rate increases, and participants cited a hawkish tone from the Fed's June meeting. According to CME FedWatch, markets are pricing in an over 30% chance that the Fed will raise interest rates by the end of 2026.
Other precious metals - Early Monday trading saw declines across the sector. Spot silver was down 1.3% at $58.4435 an ounce, while spot platinum fell 1.1% to $1,622.34 an ounce. Analysts and market participants note that higher interest rates typically create headwinds for precious metals, as they increase the opportunity cost of holding non-yielding assets relative to interest-bearing debt.
Outlook and context - The combination of geopolitical headlines, monetary policy expectations, and Treasury market dynamics has been influential in recent price action. While a reported ceasefire and scheduled talks between the U.S. and Iran alleviated some supply-driven inflation concerns, the stronger dollar and uplift in yields have continued to cap upside for bullion.
Note: This article presents the latest market movements and factors affecting precious metals based on reported prices and market indicators.