Spot gold slipped 0.2% on Monday but is closing out its best month since January, up 10% in August. The pullback comes as traders raise bets on a September rate hike after Fed Chair Kevin Warsh's hawkish Jackson Hole speech, while oil surged on a fresh U.S.-Iran clash.
Spot gold traded down 0.2% to $4,447.14/oz at 16:22 ET (20:22 GMT) on Monday, even as the metal remained on track for its best monthly performance since January. Gold futures fell 0.7% to $4,496.64/oz, but were still sitting on a 9.5% monthly gain, their strongest since February.
Oil jumps as U.S. and Iran trade strikes
Brent crude, the global benchmark, rose 5.2% to $90.59 a barrel on Monday. U.S. Central Command said late Sunday it took "limited, precise action" against minelaying forces of Iran's Islamic Revolutionary Guard Corps near the Strait of Hormuz.
Iran's foreign ministry said the U.S. struck parts of Larak Island, and that Tehran responded by hitting U.S. military bases in Jordan. Jordanian state media said the country intercepted and destroyed eight missiles. Fox News quoted Trump as saying: "We're going to hit them hard. There will be a response."
Warsh's hawkish tone lifts rate-hike bets
Fed Chair Warsh's Jackson Hole address on Friday was widely read as hawkish after he said underlying inflation trends had not "meaningfully improved." Traders responded by pushing up the odds of a September rate hike to nearly 64% on the CME FedWatch tool, up from 57% a day earlier.
The benchmark 10-year Treasury yield rose 3.5 basis points to 4.757%, its highest level since mid-January 2025, after investors sold government debt following the speech. The dollar index had jumped on Friday on the same rate expectations, and gold had shed about 3% after Warsh's speech.
Debasement trade still drives the August rally
Earlier in August, gold had climbed amid a bond-market sell-off tied to inflation jitters, corporate debt issuance concerns and worries over the ballooning national debt. A surprise Treasury Department intervention did little to cap yields, and news that U.S. debt had crossed $40 trillion fed fiscal skepticism, pushing investors toward gold and crypto in what's known as the debasement trade.
Traders now turn to a run of labor data this week: July job openings arrive Tuesday, ADP's private payrolls report follows Wednesday, and Friday brings the August nonfarm payrolls report after an unexpectedly weak July print.
Source: Commodities & Futures News
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