Gold slipped 0.2% to $4,334.55 an ounce on Monday, pulling back from a seven-week high as a firmer dollar and fading hopes for a Strait of Hormuz deal kept inflation fears alive. Friday's weak US jobs report had pushed bullion to its highest level since June 17, and more inflation data due this week could reshape the Federal Reserve's rate outlook. Gold still holds a gain of more than 5% over the past month, aided by central-bank and Tether buying.
Gold prices turned lower on Monday, pressured by a firmer US dollar, as dimming prospects for an imminent deal to reopen the Strait of Hormuz kept inflation fears alive. By 07:28 ET (11:28 GMT), spot gold had fallen 0.2% to $4,334.55 an ounce. Gold futures dipped 0.1% to $4,394.01 an ounce over the same window.
Iran tensions dash hopes for a Strait deal
Iran and the US appeared at loggerheads again, with Tehran issuing tough demands to reopen the Strait of Hormuz while President Donald Trump argued that Washington's economic pressure will eventually bring Iran to the negotiating table. Against this backdrop, hopes were all but dashed for an agreement to unblock the strait, a vital waterway that carried a fifth of the world's oil and liquefied natural gas flows before the Iran war broke out in late February. Iran has effectively shuttered the conduit for months, pushing up energy prices and threatening the global economy.
More US inflation data is due later this week, which could show how much the war has pushed up prices. That, in turn, may sway the outlook for Federal Reserve interest rates, a factor that can heavily influence gold prices.
Jobs data trims Fed rate-hike bets
On Friday, gold hit its highest level since June 17 after data showed the US economy unexpectedly shed jobs in July, with employment gains in the prior two months revised sharply lower. The weaker labor-market data prompted markets to scale back expectations for a September Fed rate hike. In theory, raising rates can help quell energy-driven inflation, though at the risk of denting jobs and the economy. A lower rate environment, by contrast, tends to support gold because it can decrease the opportunity cost of holding the non-yielding metal.
Dollar strength offsets central-bank buying
At the same time, the US dollar has been a relative safe haven for investors during the crisis, buoyed by projections that the American economy, as a major energy exporter, can ride out the Iran war's disruption. The US dollar index was last up 0.2% at 99.72 — and a stronger dollar can dent gold's appeal, as it may make the metal more expensive for overseas buyers.
Still, gold has climbed more than 5% over the past month and began August on solid footing, underpinned partly by shifting rate expectations. Heavy buying by crypto issuer Tether has also aided bullion, as has an uptick in central-bank demand in the second quarter. Analysts at ING noted that the People's Bank of China increased its gold reserves by around 20 tonnes, its largest monthly addition since October 2023.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
