Gold prices fell on Monday as oil prices surged. Higher oil prices increased concerns about inflation. They also raised expectations that the U.S. Federal Reserve could keep interest rates higher for longer. Fresh military strikes between the United States and Iran added to market uncertainty.
Spot gold dropped by about 1.3% during the first trading session of the week in Asia. It traded near $4,060 per ounce. The decline erased part of last week’s gains. Investors focused on geopolitical risks and their impact on inflation.
Oil prices climbed by more than 4% on Monday. The increase followed concerns about possible supply disruptions. Iran said the Strait of Hormuz would remain closed until further notice. However, U.S. officials insisted that the important shipping route remains open. Rising oil prices also renewed fears of stronger inflation.
The latest minutes from the Federal Reserve’s June meeting showed that several officials still favor tight monetary policy. They remain concerned about inflation. As a result, another interest rate increase remains possible. The Federal Reserve will meet again on July 28–29.
Investors now await the latest U.S. Consumer Price Index (CPI) report. The government will release the data on Tuesday. The report could shape expectations for future interest rate decisions. Traders will also watch Federal Reserve Chair Jerome Powell’s testimony before Congress. They hope to receive fresh signals about monetary policy.
Tony Sycamore, a market analyst at IG, said gold remains highly sensitive to geopolitical events and U.S. inflation data. He noted that gold found solid support near $4,000 per ounce last week. He added that a move above the $4,200 to $4,220 range could push prices toward $4,491 per ounce.
However, Sycamore also warned about downside risks. Stronger inflation data could increase expectations for tighter monetary policy. That outcome could pressure gold prices. Markets will closely monitor Tuesday’s inflation report and Powell’s congressional testimony. Both events could drive gold prices throughout the week.
