Gold Prices Hold Near $4,000 as Investors Assess Fed Outlook
Gold prices were largely unchanged on Monday as investors weighed rising U.S.-Iran tensions against the possibility that higher oil prices could keep U.S. interest rates elevated for longer.
At 22:17 ET, spot gold edged 0.1% higher to $4,020.63 per ounce. Gold futures rose 0.8% to $4,030.20.
Silver gained 1.8% to $56.97 per ounce, while platinum increased 0.2% to $1,598.45.
Middle East Conflict Revives Inflation Concerns
Gold remained under pressure after falling more than 2% during the previous week.
Investors are assessing whether the renewed conflict in the Middle East could keep inflation high, despite recent signs that U.S. price growth is slowing.
Brent crude climbed above $90 per barrel after the United States and Iran intensified military operations over the weekend.
The latest escalation reportedly included an attack on an important oil facility in Kuwait. Vessels attempting to travel through the Strait of Hormuz were also targeted.
These developments renewed fears about disruptions to global energy supplies.
Strait of Hormuz Disruption Raises Market Risks
Iran said the ceasefire with the United States had effectively collapsed.
This increased the risk of prolonged disruption through the Strait of Hormuz, one of the world’s most important oil shipping routes.
The conflict has now continued for five months. During that period, prices for energy and industrial commodities have risen sharply.
Uncertainty over U.S. President Donald Trump’s strategy toward Iran has also kept investors focused on the potential economic consequences.
Federal Reserve Interest Rate Outlook Remains Key
Recent U.S. inflation and employment data have pointed to a weaker economic environment.
However, investors remain concerned that rising energy costs could complicate the Federal Reserve’s efforts to bring inflation under control.
Higher oil prices could prevent inflation from returning to the central bank’s target as quickly as expected.
As a result, Federal Reserve officials may keep monetary policy restrictive for longer.
Higher Rates Limit Gold’s Appeal
Higher interest rates usually support U.S. Treasury yields and the dollar.
This increases the opportunity cost of holding gold because the precious metal does not provide interest or income.
ANZ analysts said the latest escalation in the Middle East briefly pushed market expectations for a Federal Reserve rate increase at the July 29 meeting to around 40%.
Those expectations later fell back to approximately 10%.
The shift highlights how closely gold prices are responding to changes in the interest-rate outlook.
ANZ Expects the Fed to Hold Rates Steady
ANZ said the threshold for another Federal Reserve rate increase remains high.
The bank continues to expect policymakers to leave rates unchanged this year.
According to ANZ, the Fed is likely to look beyond higher energy prices unless they create broader and more persistent inflation across the economy.
The bank expects gold to find support between $3,800 and $4,000 per ounce as expectations for additional monetary tightening gradually decline.
Gold Struggles to Break Away From $4,000
Gold has traded within a relatively narrow range around the psychologically important $4,000 level in recent weeks.
The metal fell 14% during the second quarter, marking its weakest quarterly performance since 2013.
The decline showed that expectations for tighter U.S. monetary policy continued to outweigh gold’s traditional safe-haven appeal.
