Gold Slides Below $4,300 as Oil Surge Fuels Fed Rate Hike Bets

Gold prices fell sharply on Monday, extending recent losses as elevated oil prices and resilient U.S. economic activity strengthened expectations that the Federal Reserve could keep interest rates higher for longer.

Spot gold (XAU/USD) dropped 1.1% to $4,236.33 an ounce, while U.S. gold futures declined 1.2% to $4,270.50. Silver fell 1.7% to $63.24 an ounce and platinum slipped 1.3% to $1,758.04.

Bullion remained under pressure as uncertainty surrounding the Strait of Hormuz pushed energy prices higher. Iran has maintained its conditions for reopening the crucial shipping route after U.S. President Donald Trump rejected Tehran’s proposal. The two sides are expected to resume negotiations this week.

Higher energy costs have intensified inflation concerns, contributing to expectations of additional Federal Reserve tightening. Markets were pricing roughly a 65% probability of another Fed rate increase at its October meeting. The central bank unanimously raised its benchmark interest rate by 25 basis points in September.

Cleveland Fed President Beth Hammack said stronger economic growth expectations, concerns over government debt and expectations for further rate increases were contributing to higher long-term Treasury yields. Rising bond yields typically weigh on gold because the precious metal does not generate interest.

Gold has traded between roughly $4,230 and $4,510 this month and remains well below its January record near $5,600. ANZ said higher yields and a firm U.S. dollar continue to create a difficult macroeconomic environment for bullion. However, investor demand remains supportive, with gold ETF holdings increasing by around 50 tonnes this month.

Attention now turns to key U.S. economic releases that could shape the Fed interest rate outlook. Investors will closely watch inflation data and Friday’s September employment report for signs of whether economic strength and persistent price pressures justify further rate hikes.