Traders await key U.S. jobs data for clues on the Federal Reserve’s next move
Gold prices moved lower on Monday as higher oil prices following recent U.S.-Iran military developments in the Gulf reinforced inflation concerns and strengthened expectations that the U.S. Federal Reserve will continue tightening monetary policy. The precious metal, which typically benefits during periods of geopolitical uncertainty, came under pressure as investors increasingly focused on the prospect of higher interest rates, which reduce the appeal of non-yielding assets such as gold. Similar price action has been observed during previous periods of elevated energy prices, when inflation expectations shifted attention toward monetary policy rather than safe-haven demand.
Spot gold declined 0.69 percent to $ 4,053.43 per ounce as of 9:56 a.m. UAE time, while U.S. gold futures for August delivery slipped 0.62 percent to $ 4,070.80. The latest decline leaves bullion on track for a fourth consecutive monthly loss, with prices down approximately 10.4 percent over the period. Despite heightened geopolitical tensions across the Middle East, investors have increasingly prioritised expectations surrounding interest rates over traditional safe-haven flows, limiting gold’s ability to recover.
The weakness in international bullion prices was mirrored across the UAE jewellery market. Local gold rates moved lower, with 24-carat gold declining AED4.75 to AED488.00 per gram. The price of 22-carat gold fell AED4.25 to AED452.00 per gram, while 21-carat gold dropped AED4.25 to AED433.25 per gram. Meanwhile, 18-carat gold lost AED3.50 to AED371.50 per gram, and 14-carat gold declined AED2.75 to AED289.75 per gram.
Energy impact
Oil prices strengthened after “Iran launched missiles and drones at U.S. military installations in Kuwait and Bahrain early on Sunday, shortly after U.S. President Donald Trump warned that Washington would take decisive action if Tehran failed to honour the agreement aimed at ending hostilities.” However, market sentiment later stabilised after “Axios reported that Tehran and Washington had agreed to halt recent military confrontations in the Gulf and resume negotiations over their dispute concerning the Strait of Hormuz.”
Higher crude oil prices are widely viewed as inflationary because they increase transportation, manufacturing, and energy costs throughout the economy. Rising inflation, in turn, raises the likelihood of tighter monetary policy by central banks. Although gold has traditionally been regarded as an inflation hedge, it often loses attractiveness during periods of rising interest rates because it does not generate income compared with interest-bearing investments.
Fed expectations
Financial markets continue to anticipate further monetary tightening by the Federal Reserve. According to the CME FedWatch Tool, traders are pricing in three interest rate hikes this year, including roughly an 80 percent probability of another increase in December. These expectations have provided continued support for the U.S. dollar and Treasury yields, creating additional headwinds for bullion prices.
Investors are now awaiting several key U.S. economic releases scheduled later this week, including June’s ADP private employment report and the closely watched nonfarm payrolls data. Both reports are expected to provide further insight into labour market strength and help shape expectations regarding the Federal Reserve’s policy path over the coming months.
Other metals
Other precious metals also traded mixed during Monday’s session. Spot silver declined 0.46 percent to $ 58.58 per ounce, while platinum fell 1.4 percent to $ 1,624.30 per ounce. Palladium outperformed its peers, rising 0.93 percent to $ 1,199.00 per ounce.
The latest decline extends a broader correction that has weighed on gold over recent months as markets increasingly price in higher-for-longer U.S. interest rates. Although bullion reached record highs earlier in 2026 amid geopolitical uncertainty and strong central bank buying, persistent inflation and expectations of tighter monetary policy have shifted investor preference toward interest-bearing assets.
Central bank purchases nevertheless continue to provide structural support for the gold market over the longer term. According to the World Gold Council, official sector demand has remained historically strong in recent years as central banks diversify reserve holdings and reduce dependence on major reserve currencies. Meanwhile, the International Monetary Fund has repeatedly noted that commodity price shocks, particularly in oil markets, remain an important driver of inflation expectations and monetary policy decisions, reinforcing the close relationship between energy prices, interest rates, and precious metals.