Gold slipped on Monday as traders weighed a more hawkish Federal Reserve and fresh U.S.-Iran strikes that pushed oil higher. Spot prices fell 0.4% to $4,431.55 an ounce even as the metal still holds a near 10% gain for August, its strongest month since January.
Gold retreated after the U.S. and Iran exchanged strikes for the first time in a month, adding a new layer of uncertainty to energy markets and reviving inflation concerns that support a higher-for-longer rate path. At 02:40 ET, XAU/USD fell 0.4% to $4,431.55 an ounce. Gold Futures slipped to $4,480.00.
Fresh U.S.-Iran strikes revive inflation concerns
U.S. forces struck Iranian rocket launchers on an island in the Strait of Hormuz on Sunday, saying the weapons were being prepared to deploy mines in the strategic waterway. Iran then attacked targets in the United Arab Emirates and Jordan, underlining the standoff between Washington and Tehran after more than six months of conflict.
Oil prices moved higher after posting their biggest gain in three weeks on Monday. Higher energy prices matter for gold because they can feed inflation, giving the Federal Reserve another reason to keep rates high or raise them further — a headwind for bullion since it does not generate interest, so rising rates raise the opportunity cost of holding the metal.
Markets now price more than a 60% probability of a 25 basis point Fed rate increase at the September 15-16 meeting, according to CME FedWatch. Tony Sycamore, senior market analyst at IG, said the recent $300 decline from last week's high near $4,697 to Monday's low around $4,397 reflected the combination of a hawkish Jackson Hole speech from Warsh and renewed tensions around Hormuz, a mix that has pushed bond yields higher and left gold vulnerable ahead of the Fed's next meeting.
Treasury moves keep the debasement trade intact
Despite the pullback, gold clocked nearly 10% gains in August, its strongest monthly gain since January. The rally accelerated after the U.S. Treasury unexpectedly announced plans to increase purchases of longer-dated government debt, an intervention that lowered borrowing costs and pushed the dollar lower while reviving concerns around the scale of U.S. sovereign debt and the potential for currency devaluation.
Those concerns have brought the debasement trade back into focus, a theme that helped drive gold's roughly 65% rally in 2025 as investors sought protection from rising government deficits and currency weakness. Investor demand has broadened as a result, with gold-backed ETFs posting their largest daily inflow since September 2025 and extending a run of net inflows to five straight weeks.
However, the hawkish shift from the Fed has now interrupted that momentum. Gold also slipped back below its 200-day moving average, which stood near $4,526, causing some short-term technical damage.
Source: Investing.com
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