Gold prices declined on Monday as higher-than-expected US inflation data increased market expectations for a Federal Reserve interest rate increase this week, while the dollar strengthened and oil prices moved higher.
At 02:28 ET (06:28 GMT), XAU/USD was down 0.4% at $4,331.84 an ounce, while gold futures declined 0.8% to $4,371.65.
Silver fell 1.0% to $63.88 an ounce, while platinum gained 0.2% to $1,802.94. The US Dollar Index rose 0.3% to 99.42.
Gold had fallen for three consecutive weeks, declining 1.8% over the previous week despite finishing Friday’s session higher.
US Inflation Increases Expectations for September Rate Hike
August inflation data showed that the US core consumer price index, which excludes food and energy, increased 0.3% month on month.
The data contributed to expectations that the Federal Reserve could raise interest rates for the first time in three years at this week’s policy meeting.
Markets were pricing an approximately 88% probability of a September rate increase. Higher interest rates can reduce the relative appeal of non-yielding assets such as gold compared with interest-bearing investments.
US President Donald Trump reiterated his preference for lower interest rates on Sunday, continuing his criticism of the Federal Reserve’s monetary policy stance.
Oil Prices Add to Inflation Outlook
Energy markets were also in focus as Brent crude approached $107 a barrel after gaining almost 9% in the previous week amid continued disruption linked to the Middle East conflict.
A meeting scheduled for Monday between Iran and several Gulf countries concerning a temporary shipping route through the Strait of Hormuz was postponed, leaving uncertainty over efforts to increase shipments through the waterway.
Higher energy costs are also being monitored for their potential effect on the inflation outlook and, consequently, expectations for Federal Reserve monetary policy.
ANZ Maintains $5,400 Gold Target
Gold has traded in a relatively narrow range around $4,400 since recovering from levels near $4,000 in July as markets reassessed expectations for US interest rates.
ANZ maintained its longer-term view on gold despite forecasting additional monetary tightening. The bank expects three 25-basis-point Federal Reserve rate increases by March 2027.
ANZ expects Middle East tensions and higher energy prices to contribute to inflation, while also viewing geopolitical disruption as a factor that could maintain demand for gold as a safe-haven asset.
The bank maintained its 12-month gold price target at $5,400 an ounce.
ANZ also cited a recovery in gold exchange-traded fund holdings and speculative positions in recent months, alongside institutional demand in China and increased investor participation in India.