Gold prices fell further on Monday, touching their lowest level in nearly three months as stronger U.S. economic data reinforced expectations that the Federal Reserve could keep interest rates elevated for longer, while rising oil prices added to inflation concerns.
Spot gold declined 0.8% to $4,296.08 an ounce by 02:49 ET (06:49 GMT), marking its weakest level since March 23. U.S. gold futures for August delivery also moved lower, falling 1% to $4,322.60 per ounce.
The precious metal has been under pressure since Friday, when it dropped more than 3% after investors reassessed the outlook for U.S. monetary policy following a stronger-than-expected employment report.
Strong labour market data dampens rate-cut hopes
Fresh economic figures released on Friday showed that the U.S. economy created 172,000 jobs in May, comfortably exceeding market expectations. The unemployment rate remained unchanged at 4.3%.
The stronger labour market data prompted traders to reduce expectations for interest rate cuts this year, lifting Treasury yields and supporting the U.S. dollar. Higher yields and a firmer dollar typically reduce the attractiveness of gold, which does not generate income.
“Despite the lack of consistent messaging in the labour market data, we now have a rate hike fully priced at the December FOMC meeting,” ING analysts said in a recent note.
The U.S. Dollar Index traded broadly unchanged during Asian hours on Monday after climbing to a two-month high in the previous session.
Middle East tensions drive oil higher
Geopolitical developments also remained in focus after Israel said it had carried out strikes against military targets in western and central Iran, as well as a petrochemical facility near Mahshahr. The attacks represented one of the most significant actions against Iranian energy-related infrastructure since the ceasefire reached in April.
The latest escalation followed several waves of Iranian missile launches targeting Israel in response to an Israeli strike near Beirut.
Oil markets reacted sharply to the renewed tensions, with crude prices rising almost 5% on Monday. The rally heightened concerns that higher energy costs could add further pressure to global inflation and complicate the outlook for central banks.
Although gold is often viewed as a safe-haven asset during periods of geopolitical uncertainty, support from haven demand was outweighed by the stronger dollar and expectations of tighter U.S. monetary policy.
Silver and platinum also move lower
Other precious metals also traded in negative territory. Silver fell 1.2% to $677.00 per ounce, while platinum declined 0.9% to $1,764.58 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange edged 0.3% higher to $13,543.33 per tonne. U.S. copper futures, however, slipped 0.1% to $6.28 per pound.