Gold prices continued to fall on Monday, the first trading day of the week, as investors reacted to renewed concerns over inflation and the possibility of higher U.S. interest rates.
Spot gold dropped 0.8% to $4,055 per ounce. Meanwhile, gold futures for delivery next month declined 0.7% to $4,069 per ounce.
Despite reports that the United States and Iran have agreed to halt attacks and hold further negotiations this week, gold remained under pressure. Normally, easing geopolitical tensions reduces demand for safe-haven assets such as gold.
Moreover, the precious metal recorded its lowest level in nearly eight months last week. Investors continue to expect the U.S. Federal Reserve to keep interest rates high or raise them further before the end of 2026.
Higher interest rates usually strengthen the U.S. dollar. As a result, gold becomes more expensive for buyers using other currencies. Consequently, demand for the metal often declines.
In addition, the recent easing of tensions between Washington and Tehran has reduced concerns about rising energy prices. Last week, oil prices fell sharply and returned close to their pre-conflict levels. Therefore, investors now expect lower inflationary pressure from energy markets.
However, gold continues to face pressure from both a stronger dollar and higher U.S. Treasury yields. These factors have reduced the appeal of non-yielding assets such as gold.
According to market surveys, traders now see more than a 30% chance that the Federal Reserve will increase interest rates before the end of 2026.
Furthermore, recent U.S. inflation data and the Federal Reserve’s latest policy signals have strengthened expectations of tighter monetary policy. Investors are closely monitoring upcoming economic data for further clues about the central bank’s next move.
Analysts believe gold prices will remain volatile in the coming weeks as markets balance inflation expectations, interest rate forecasts, and global geopolitical developments.
