Gold Hits 11-Week Low as Fed Outlook, Oil Spike Pressure Prices

Gold Extends Losses on Fed Rate Expectations

Spot gold was down 0.8% at $4,296.08 an ounce by 02:49 ET (06:49 GMT) on Monday, its lowest level since March 23. U.S. Gold Futures for August delivery slipped 1% to $4,322.60 per ounce.

The metal had already dropped more than 3% on Friday as investors reassessed the outlook for U.S. monetary policy following robust labor market data. U.S. data released on Friday showed the economy added 172,000 jobs in May, exceeding economists’ forecasts, while the unemployment rate held steady at 4.3%.

The figures prompted traders to scale back expectations for a Federal Reserve rate cut this year, pushing U.S. Treasury yields and the dollar higher and reducing the appeal of non-yielding assets such as gold. ING analysts noted in a recent report that “we now have a rate hike fully priced at the December FOMC meeting,” despite what they described as a lack of consistent messaging in the labor market data.

The U.S. Dollar Index traded largely flat in Asian trading on Monday after having surged to a two-month high in the previous session.

Geopolitical Tensions Lift Oil, Add to Inflation Concerns

Geopolitical tensions in the Middle East also shaped market sentiment. Israel said on Monday it had targeted military sites in western and central Iran, as well as a petrochemical facility near Mahshahr, marking a significant attack on Iranian energy-linked infrastructure since a ceasefire was reached in April. The move followed several rounds of missile launches by Iran toward Israel in response to an Israeli strike on the outskirts of Beirut.

Oil prices surged nearly 5% on Monday, amplifying concerns that higher energy costs could complicate the global inflation outlook. Although gold has historically attracted safe-haven demand during periods of geopolitical uncertainty, the metal was pressured by the firmer dollar and shifting expectations for U.S. monetary policy.

Among other precious metals, silver prices fell 1.2% to $677.00 per ounce, while platinum slipped 0.9% to $1,764.58 per ounce. In base metals, Benchmark Copper Futures on the London Metal Exchange edged up 0.3% to $13,543.33 a ton, while U.S. Copper Futures fell 0.1% to $6.28 a pound.

FAQ

Why did gold hit an 11-week low?
Gold declined to an 11-week low mainly because strong U.S. jobs data reduced expectations for Federal Reserve rate cuts, lifting Treasury yields and the U.S. dollar and diminishing the appeal of non-yielding assets.

How did U.S. labor data influence Fed expectations?
The U.S. economy added 172,000 jobs in May with the unemployment rate at 4.3%, leading traders to scale back rate-cut expectations and, according to ING analysts, fully price in a rate hike at the December FOMC meeting.

What role did Middle East tensions play in markets?
Renewed hostilities between Israel and Iran, including Israeli strikes on Iranian military sites and a petrochemical facility, pushed oil prices up nearly 5%, raising inflation concerns that further complicated the environment for gold.

How did other metals trade alongside gold?
Silver fell 1.2% to $677.00 per ounce, platinum slipped 0.9% to $1,764.58 per ounce, Benchmark Copper Futures on the LME rose 0.3% to $13,543.33 a ton, and U.S. Copper Futures edged down 0.1% to $6.28 a pound.