Gold slides as US-Iran strikes lift oil, rate hike bets

Gold prices eased at the start of the new week as renewed military exchanges between the United States and Iran pushed oil higher and reinforced expectations that the Federal Reserve may raise interest rates later this year, adding pressure to precious metals already in a months-long retreat.

Spot gold fell to around $4,055 per ounce on Monday, June 29, a decline of roughly 0.8% from the prior session, according to Trading Economics data. The drop extended a losing streak that has seen the metal shed more than 25% from its all-time high above $5,600 reached in January.tradingeconomics

Strikes Stall Diplomacy, Lift Oil

The latest escalation began Saturday when U.S. Central Command said it struck 10 Iranian military targets — including surveillance infrastructure, air defense sites, and drone storage facilities — in response to an Iranian drone attack on a Panamanian-flagged tanker in the Strait of Hormuz. Iran's Revolutionary Guard retaliated Sunday with drone and missile strikes aimed at U.S. military sites in Bahrain and Kuwait, and warned it could impose a "complete halt" on negotiations if American attacks continued, according to the Associated Press.apnews+2

Oil prices responded swiftly. Brent crude climbed to $72.49 a barrel on Monday, up 0.69%, while West Texas Intermediate rose to $69.96, gaining 1.05%, Reuters reported. The increase reignited concerns about energy-driven inflation, a factor that has kept the Fed on the sidelines this year.globalbankingandfinance

Rate Hike Expectations Weigh on Metals

The Federal Reserve held rates steady at 3.5%–3.75% at its June 17 meeting, but updated projections showed several policymakers anticipating rate increases. The CME FedWatch tool following that meeting showed roughly 36% odds of a 25-basis-point hike by year-end and nearly 34% odds of a 50-basis-point increase. Bank of America ↗ 0.63% subsequently forecast three quarter-point hikes beginning in September, which would lift rates to 4.25%–4.5%.foxbusiness+1

Higher Treasury yields have compounded the pressure on non-yielding gold. The 10-year yield stood at 4.38% as of June 26, above its year-ago level.ycharts+1

China Buying Offers Limited Support

China's People's Bank of China continued its gold-purchasing streak, having added 320,000 troy ounces in May — its 19th consecutive month of buying and the longest such run since at least 2015, according to Bloomberg. Poland and the Czech Republic also added to reserves in April, the World Gold Council reported. But analysts noted that central bank demand has been insufficient to offset the headwinds from rising yields and a stronger dollar.bloomberg+1

Comex gold ended last week 3.44% lower at $4,078.70, according to The Wall Street Journal News Corp ↗ 3.15%. With nonfarm payrolls data due later this week, traders said the metal could test the psychologically important $4,000 level if labor market strength further bolsters the case for tighter monetary policy.wsj