Gold spot prices held near $4,051 an ounce Monday, barely budging even as an Iran de-escalation sent oil sharply lower and equities higher. The metal's inertia traces to rising odds of a September Federal Reserve rate hike, which is capping bullion through higher yields even as Deutsche Bank keeps a bullish year-end call in place.
Gold's failure to rally Monday is the story. Spot metal sat at $4,051 an ounce by 10 a.m., up $13 versus the July 31 print, even as West Texas Intermediate crude sank 6.21% to $79.41 after President Trump called off planned strikes against Iran and opened negotiations. A safe-haven asset would normally sell off hard once a war-risk premium leaves the market, but bullion did neither: December futures opened up 0.7%, then faded to a range that has held for weeks.
The Fed's Divided Vote Is Driving the Range
The Federal Reserve, not Iran, explains the inertia. On July 29 the FOMC voted 9-3 to hold rates, the most divided decision since September 2016, with all three dissents favoring an immediate hike. As a result, CME FedWatch now shows a 64.5% probability of a rate hike at the September meeting. Under Chair Kevin Warsh, the committee has shifted from a projected easing path to a projected tightening path, keeping a rate hike firmly in view. The ten-year Treasury yield sits at 4.69% after topping 4.73% on Friday, its highest in over a year. The thirty-year yield spiked to 5.25% last week, the highest since 2007. Higher yields raise the opportunity cost of holding non-yielding gold, offsetting whatever lift comes from a calmer Middle East.
Deutsche Bank Still Sees $4,700 by Year-End
Despite the pullback, Deutsche Bank told clients Monday that gold remains in an explosive phase of price behavior that began in August 2024. Analysts Michael Hsueh and Bryant Xu put fair value near $4,700 an ounce by year-end, slightly above the bank's $4,600 fourth-quarter forecast, which it maintained. That view sits opposite JPMorgan, which cut its target 25% to $4,500 in early July after defending $6,000 through the spring. Morgan Stanley holds a $5,200 target contingent on Western ETF buyers returning. The World Gold Council puts fair value near $4,100, with upside to $4,500 or higher on a macro shift.
Central Banks Keep Buying as ETFs Sell
Gold's drawdown from its January 28 all-time high of $5,589.38 now stands at 27.5%. Yet central banks bought 289 tonnes in the second quarter, a 62% increase over Q2 2025. Gold-backed ETFs, meanwhile, recorded 45 tonnes of net outflows over the same period. That split between official and Western investor demand explains why gold has floored near $4,040 rather than breaking down.
Source: Commodities Analysis & Opinion
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