Gold steadies near $4,000 amid Iran conflict, Fed uncertainty

Gold hovered near $4,000 an ounce on Monday as investors weighed escalating U.S.-Iran hostilities against growing expectations that surging oil prices could push the Federal Reserve toward a rate increase, raising the opportunity cost of holding bullion. Spot gold edged slightly higher from Friday's close, trading around the $4,000 mark in thin early moves.150currency+1

Geopolitical Crosscurrents

The precious metal has been buffeted by weeks of volatility tied to the conflict in the Strait of Hormuz. Crude prices jumped after the United States launched fresh strikes against Iranian military installations, with Tehran expanding attacks to Qatar and the United Arab Emirates over the preceding weekend. The renewed hostilities prompted the U.S. Treasury Department to revoke a 60-day waiver on Iranian oil sanctions, barring new transactions after July 17.aljazeera+2

Oil's climb has revived speculation that the Fed may raise rates at its July 28-29 meeting. CME's FedWatch tool showed the probability of a 25-basis-point hike reached as high as 46.5% earlier in July before retreating sharply after a cooler-than-expected June inflation report. Reuters reported that traders saw only about a 10% chance of a hike at the July meeting as of mid-month, though pricing for a September increase remained elevated at roughly 60%. Polymarket traders assigned a 78.5% probability to the Fed holding rates steady at 3.50-3.75%.readtreasury+2

China's Shadow Gold Demand

A Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.26% research note published late last week added a notable wrinkle to the gold outlook. The bank estimated that China acquired 48 tonnes of gold through the London over-the-counter market in May — nearly five times the 10 tonnes officially reported by the People's Bank of China. Goldman's nowcast put total central bank gold purchases at 81 tonnes in May, well above the pre-2022 average of 17 tonnes per month.vblgoldfix.substack+1

China's central bank officially added 15 tonnes of gold in June, its largest monthly addition in at least two and a half years, extending its buying streak to 20 consecutive months. The World Gold Council reported that global central banks purchased 244 tonnes of gold in the first quarter of 2026, up 17% from the prior quarter.advantagegold+1

Outlook

StoneX's quarterly commodities report projected gold would finish 2026 close to $4,000, with volatility around that level, while silver was expected to oscillate between $55 and $60 an ounce. Goldman Sachs maintained a more bullish $4,900 year-end target, arguing that central bank accumulation should provide a price floor during periods of Fed-related weakness. The Fed's next rate decision on July 29 and the trajectory of the Iran conflict remain the dominant forces for bullion in the near term.kitco+1