Gold prices were largely unchanged on Monday as investors weighed geopolitical risks from the U.S.–Iran conflict, movements in oil prices, and the possibility that the Federal Reserve may tighten monetary policy further.

Gold Trades Around $4,020 per Ounce

As of 09:11 GMT, spot gold was little changed at $4,018.75 per ounce.

U.S. gold futures for August delivery rose 0.1% to $4,023.20 per ounce.

According to UBS analyst Giovanni Staunovo, gold is currently showing a negative correlation with oil prices as market participants closely monitor developments in the Middle East.

U.S.–Iran Conflict Continues to Drive Markets

U.S. forces carried out attacks against Iran for a ninth consecutive day. Concerns over shipping through the Strait of Hormuz also increased after Iran reported that two oil tankers had exploded and were left unable to operate.

Oil prices initially climbed to their highest level in more than a month before giving up part of their gains. The pullback came after Iran’s Foreign Ministry said negotiations with the United States could still be pursued if they aligned with the country’s national interests.

Higher Oil Prices Raise Inflation Concerns

Persistently high oil prices could add to inflationary pressure and strengthen expectations that interest rates will remain elevated for longer.

Gold is generally considered a hedge against inflation. However, higher interest rates tend to reduce the appeal of the precious metal because it does not generate interest income.

Cleveland Fed President Beth Hammack also suggested that the Fed may need to raise interest rates further to bring persistent inflation under control.

According to the CME FedWatch data provided, markets are now pricing in an approximately 80% probability of a Fed rate hike in December, up from 73% the previous week.

UBS Expects Gold to Move Back Above $5,000

UBS expects a weaker U.S. dollar to support gold prices over the next six to twelve months.

According to Staunovo, gold could move back above $5,000 per ounce during this period. However, this remains an analyst forecast rather than a price level confirmed by the market.

Other Precious Metals Advance

Elsewhere in the precious metals market:

• Spot silver gained 1.6% to $56.79 per ounce.

• Platinum rose 0.2% to $1,595.08 per ounce.

• Palladium advanced 1.3% to $1,264.62 per ounce.

Conclusion

Gold remains stable as the market balances geopolitical risks against pressure from the prospect of higher interest rates.

In the near term, developments in the Strait of Hormuz, movements in oil prices, and further signals from Federal Reserve officials will remain key factors shaping gold’s direction.

Source: Reuters