Gold Crosses $5,000

Gold fell to around $4,200 an ounce on Monday, hitting its lowest levels in seven weeks as stalled US-Iran negotiations kept oil prices elevated and reinforced expectations for additional Federal Reserve tightening to curb inflation. President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, saying Tehran had overplayed its hand while adding that he expects talks to resume this week. Meanwhile, Iran said it would not soften its conditions for reopening the strategically important waterway. In the US, several Fed officials cited resilient economic growth and a robust labor market as reasons additional rate hikes could be necessary. Cleveland Fed President Beth Hammack said those factors, together with concerns over government debt, are contributing to higher long-term Treasury yields. Investors now await the Fed’s preferred inflation gauge and key US jobs data due this week, which could provide further clues on the path of monetary policy.

Gold traded around $4,280 an ounce on Friday, down more than 1% for the week, as elevated US Treasury yields and growing expectations of further Federal Reserve rate hikes weighed on the metal. Traders are pricing in a nearly 70% chance of a rate hike in October and a 95% probability of another increase in December, according to the CME FedWatch Tool, as inflationary pressures remain elevated and economic data continues to signal resilience in the US economy. The pressure on gold persisted despite a decline in oil prices on Friday, after US and Iranian negotiators in New York reportedly explored a deal that could see Tehran reopen the Strait of Hormuz in exchange for Washington easing its economic blockade of Iran. Meanwhile, gold demand in India picked up modestly as lower prices attracted buyers ahead of the festive season.

Gold traded around $4,270 an ounce on Friday and was on track to decline more than 2% for the week, pressured by a stronger dollar and surging Treasury yields as expectations grew that the Federal Reserve may need to raise interest rates further to curb inflation. On Thursday, the 10- and 30-year US Treasury yields rose to their highest levels since 2007 and 2004, respectively, while the dollar climbed to a near two-month high. The moves came as stronger-than-expected US economic data and elevated oil prices fueled concerns over persistent inflation and higher interest rates. Markets are currently pricing in roughly a 67% probability of a Fed rate hike in October, following the first increase in three years last week. Meanwhile, oil prices retreated on reports that the US and Iran were considering a phased agreement that could reopen the Strait of Hormuz and lift a US blockade on Iranian ports.