Gold prices fell more than 1% on Monday as a rise in oil prices heightened inflation concerns and reinforced market expectations of further US Federal Reserve interest rate hikes.
Spot gold was down 1.5% at $4,223.95 an ounce as of 0117 GMT, while US gold futures fell 1.5% to $4,257.90, extending the metal's recent slide after it ended last week down more than 2%.
Oil and yields pressuring the metal
"The high bond yields and high oil price tandem continues to act as a thorn in gold's side. Oil prices have risen on mixed signals about oil flows, which is keeping inflation front and centre for investors," said Tim Waterer, chief market analyst at KCM Trade.
Crude rebounded more than 1% after Iran insisted that only diplomacy could resolve its conflict with the United States and Israel, following US President Donald Trump saying he had rejected an Iranian proposal to reopen the Strait of Hormuz. The impasse over the vital waterway has kept energy costs elevated: Brent is up about 70% in 2026 so far, and was trading above $106 a barrel on Monday.
That energy pressure has tightened the screws on Fed policy expectations. The central bank raised its benchmark rate by a quarter percentage point to a range of 3.75–4% earlier this month, and traders are now pricing in a roughly 66% chance of another hike in October, according to CME's FedWatch Tool.
Higher rates remain the classic headwind for bullion. While gold is widely viewed as a hedge against inflation, rising interest rates increase the opportunity cost of holding the non-yielding metal.
A crowded week of data
Investors will be watching a run of US labour-market and inflation data this week — including job openings, the ADP employment report, the Personal Consumption Expenditures price index and nonfarm payrolls. "Stronger-than-expected inflation or employment numbers could keep upward pressure on bond yields and weigh further on gold," Waterer added.
Cleveland Fed President Beth Hammack said on Friday she is concerned that persistently high inflation risks conditioning the American public to accept elevated prices as the norm, adding that the central bank cannot let that happen.
Elsewhere in metals, spot silver fell 2.6% to $62.64 an ounce, platinum was down 2.1% at $1,741.45 and palladium lost 2.1% to $1,239.95. Gold has traded between roughly $4,230 and $4,510 an ounce through September — well below the record high of almost $5,600 reached in January — as traders repeatedly recalibrate the outlook for Fed policy. In the bond market, the gap between 10-year and two-year Treasury yields shrank to as little as 17 basis points last week, the slimmest since early 2025, raising talk of a possible inversion.
Sources:
- Gold drops more than 1% on US rate-hike bets — Reuters, September 28, 2026
- Gold declines as Hormuz impasse keeps rate hike bets elevated — The Business Times, September 28, 2026
Spot gold was down 1.5% at $4,223.95 an ounce as of 0117 GMT, while US gold futures fell 1.5% to $4,257.90, extending the metal's recent slide after it ended last week down more than 2%.
Oil and yields pressuring the metal
"The high bond yields and high oil price tandem continues to act as a thorn in gold's side. Oil prices have risen on mixed signals about oil flows, which is keeping inflation front and centre for investors," said Tim Waterer, chief market analyst at KCM Trade.
Crude rebounded more than 1% after Iran insisted that only diplomacy could resolve its conflict with the United States and Israel, following US President Donald Trump saying he had rejected an Iranian proposal to reopen the Strait of Hormuz. The impasse over the vital waterway has kept energy costs elevated: Brent is up about 70% in 2026 so far, and was trading above $106 a barrel on Monday.
That energy pressure has tightened the screws on Fed policy expectations. The central bank raised its benchmark rate by a quarter percentage point to a range of 3.75–4% earlier this month, and traders are now pricing in a roughly 66% chance of another hike in October, according to CME's FedWatch Tool.
Higher rates remain the classic headwind for bullion. While gold is widely viewed as a hedge against inflation, rising interest rates increase the opportunity cost of holding the non-yielding metal.
A crowded week of data
Investors will be watching a run of US labour-market and inflation data this week — including job openings, the ADP employment report, the Personal Consumption Expenditures price index and nonfarm payrolls. "Stronger-than-expected inflation or employment numbers could keep upward pressure on bond yields and weigh further on gold," Waterer added.
Cleveland Fed President Beth Hammack said on Friday she is concerned that persistently high inflation risks conditioning the American public to accept elevated prices as the norm, adding that the central bank cannot let that happen.
Elsewhere in metals, spot silver fell 2.6% to $62.64 an ounce, platinum was down 2.1% at $1,741.45 and palladium lost 2.1% to $1,239.95. Gold has traded between roughly $4,230 and $4,510 an ounce through September — well below the record high of almost $5,600 reached in January — as traders repeatedly recalibrate the outlook for Fed policy. In the bond market, the gap between 10-year and two-year Treasury yields shrank to as little as 17 basis points last week, the slimmest since early 2025, raising talk of a possible inversion.
Sources:
- Gold drops more than 1% on US rate-hike bets — Reuters, September 28, 2026
- Gold declines as Hormuz impasse keeps rate hike bets elevated — The Business Times, September 28, 2026
