Gold Price Movement
Spot gold rose 0.6% on Monday, closing at $4,076.80 per ounce, while the nearest gold futures contract inched up 0.2% to $4,079.00. The modest advance broke a two‑week losing streak for bullion and was largely attributed to technical buying in an environment still pressured by oil‑driven inflation concerns.
Oil Price Context
Oil prices had surged roughly 20% over the preceding two weeks as the United States and Iran exchanged tit‑for‑tat strikes over control of the Strait of Hormuz. Brent crude jumped 20.6% and West Texas Intermediate rose 19.2% during that period. On Monday, oil prices slid after the two sides announced a pause in the strikes, easing inflationary pressure on gold.
Federal Reserve Outlook
The market is pricing a 62% probability that the Federal Reserve will leave the federal funds rate unchanged in the 3.5% to 3.75% target range at its upcoming meeting. The CME FedWatch tool reflects this likelihood. Nevertheless, the probability of a rate hike has risen to about 35%, reflecting lingering uncertainty.
Fed Chair Kevin Warsh, newly appointed, reiterated the Federal Open Market Committee’s commitment to price stability and announced the formation of five task forces to review communications, the inflation framework, and other operational matters.
Economist David Doyle of Macquarie noted that, for the first time this year, the decision appears ambiguous, with markets watching for any dissenting votes, changes in statement language, and Warsh’s press‑conference remarks. He added that, should the Fed hold rates, dissent is likely, and he expects the next policy move to be a hike, most probably in December.
Economic Calendar
Traders will also receive second‑quarter U.S. GDP data and the June personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, later in the week, providing additional cues on monetary policy direction.
Geopolitical Developments
The pause in hostilities follows a New York Times report that President Donald Trump halted plans to sharply escalate U.S. military operations in Iran after consultations with senior advisers, citing dwindling Pentagon stockpiles of air‑defense systems. The United States had conducted strikes for 13 consecutive days, while Iran retaliated against American bases in neighboring countries. The conflict began after Iran attacked commercial vessels in the Strait of Hormuz, collapsing an interim peace deal reached in June, and was compounded by Houthi attacks on Saudi tankers in the Bab el‑Mandeb Strait.
U.S. Ambassador to the United Nations Mike Waltz told Fox News that talks with Iran were “ongoing” and occurring at “every level.” President Trump told reporters that the U.S. had “pretty much destroyed” Iran’s military and expressed optimism that a deal could be reached.
Contributors
The article was contributed by Ayushman Ojha and Scott Kanowsky.