Gold slid over 1% on Monday as fears of
a closure of the Strait of Hormuz drove oil prices sharply
higher, reviving expectations of elevated interest rates to
combat inflationary pressures from escalating hostilities in the
Middle East.
Spot gold dropped 1.5% to $4,059.11 per ounce by 0356
GMT. U.S. gold futures for August delivery were down
1.1% at $4,067.10.
US and Iranian forces have exchanged heavy missile and drone
assaults, with Tehran targeting U.S. facilities in states across
the Gulf on Sunday and saying it had again closed the vital
Strait of Hormuz.
Oil prices jumped about 4%, the dollar and U.S. Treasury
yields climbed, and share markets slipped in Asia.
“Any breakout of violence in the Gulf is accompanied by
pressure on gold,” said Nicholas Frappell, global head of
institutional markets at ABC Refinery.
“The question is, if the Strait of Hormuz remains
effectively or partially closed, does that lead to a
deflationary effect, further down the road, that might actually
be supportive for gold if you have demand destruction leading to
lower economic activity,” Frappell added.
Kevin Warsh’s first semiannual testimony before Congress as
Federal Reserve chair, along with a slate of key U.S. economic
data, including June CPI, PPI and retail sales, will be closely
watched this week for fresh clues on the economy, inflation and
the monetary policy outlook.
Remarks from Fed policymakers, including Vice Chair Michelle
Bowman and Governor Christopher Waller, later in the day are
also in focus as they could provide insights on how inflationary
pressures are affecting the central bank’s stance on interest
rate hikes.
Traders are currently pricing in a 72% chance of a U.S. Fed
interest rate hike in September, up from about 63% last week,
according to the CME FedWatch Tool.
Elsewhere, spot silver declined 2.9% to $58.14 per
ounce, platinum shed 1.8% to $1,598.48, and palladium
fell 2.3% to $1,247.27.
Published on July 13, 2026
