Gold extended its decline on Monday, falling more than 3% as higher US Treasury yields, a firmer dollar and expectations surrounding further Federal Reserve interest rate increases remained in focus.
At 04:58 ET, spot gold was down 3.3% at $4,146.12 an ounce, while gold futures declined by the same percentage to $4,178.05. Spot silver fell 5.12% to $61.02 an ounce, while platinum dropped 3.2% to $1,725.01.
The US Dollar Index edged 0.1% higher to 101.09.
Oil Prices Add to Inflation Considerations
Energy prices remained another factor for financial markets as uncertainty continued over the Strait of Hormuz.
Iran has maintained conditions attached to reopening the waterway after US President Donald Trump rejected Tehran’s proposal. The plan provided for the strait to reopen within seven days while broader negotiations resumed, subject to several conditions.
Trump has indicated that he expects further discussions with Iran during the week.
Brent crude has risen substantially during 2026 amid disruption to regional energy supplies and shipping, adding another consideration for investors assessing the outlook for inflation.
Markets Assess Prospects for Further Fed Rate Increases
Expectations surrounding US monetary policy have also contributed to movements in precious metals.
The Federal Reserve increased the target range for the federal funds rate by 25 basis points to 3.75%-4.00% at its September meeting, with the Federal Open Market Committee voting unanimously for the move.
The central bank said economic activity was expanding at a solid pace while inflation remained elevated.
According to the source, financial markets were assigning an approximately 65% probability to another 25-basis-point increase in October.
Higher interest rates and bond yields can reduce the relative appeal of non-yielding assets such as gold. A stronger US dollar can also increase the cost of dollar-denominated metals for buyers using other currencies.
Gold Moves Below Recent Trading Range
Monday’s decline took spot gold below $4,200 an ounce and beneath the $4,230-$4,510 range cited for trading earlier in the month.
Gold was also below its record high of almost $5,600 an ounce reached in January, according to the source.
ANZ said the combination of higher yields and a stronger dollar continued to present a challenging macroeconomic environment for bullion.
The bank also pointed to continued demand from exchange-traded funds, with gold ETF holdings increasing by approximately 50 tonnes so far during the month.
Separate World Gold Council figures showed global physically backed gold ETF holdings increased by 121 tonnes during August to a record 4,189 tonnes.
Inflation and Employment Data Ahead
US economic indicators will provide the next set of data for investors assessing the Federal Reserve’s policy outlook.
Consumer sentiment weakened to a four-month low in September, according to the source, as respondents expressed increased concerns about prices and broader economic conditions.
US Treasury Secretary Scott Bessent has called for the Federal Reserve to remain open-minded on interest rates. He argued that productivity improvements associated with artificial intelligence and deregulation could help contain inflation.
Markets will next assess August personal consumption expenditures inflation figures and the September employment report.
The Federal Reserve’s September projections showed median PCE inflation of 3.7% for 2026 and core PCE inflation of 3.4%, compared with the central bank’s longer-term inflation objective of 2%.
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