Gold prices fell more than 3% on Monday, extending the previous week’s decline as investors assessed higher Treasury yields, a firmer US dollar and the outlook for further Federal Reserve interest rate increases.
At 04:58 ET, spot gold fell 3.3% to $4,146.12 an ounce, while gold futures declined 3.3% to $4,178.05. Spot silver dropped 5.12% to $61.02 an ounce and platinum declined 3.2% to $1,725.01.
The US Dollar Index was up 0.1% at 101.09.
Higher Oil Prices Keep Inflation Outlook in Focus
Oil prices remained elevated as uncertainty continued over the Strait of Hormuz after Iran maintained its conditions for reopening the waterway following US President Donald Trump’s rejection of Tehran’s proposal.
Iran’s proposal provided for the strait to reopen within seven days alongside renewed negotiations, subject to several conditions. Trump rejected the proposal, while Iran subsequently reiterated that diplomacy remained its preferred route for resolving the conflict.
Higher energy prices have remained a factor in market expectations for inflation and US monetary policy. Brent crude has risen substantially during 2026 amid disruption to energy supplies and shipping.
Federal Reserve Rate Outlook Pressures Gold
Gold’s decline also came as investors assessed the prospect of additional US interest rate increases.
The Federal Reserve raised its target range for the federal funds rate by 25 basis points in September to 3.75%-4.00%. The decision was approved unanimously by the Federal Open Market Committee.
The Fed said economic activity was expanding at a solid pace and inflation remained elevated. Its September projections showed a median federal funds rate of 4.1% for 2026, although individual policymakers’ projections covered a range of outcomes.
According to the source, markets were pricing an approximately 65% probability of another rate increase in October.
Higher interest rates and Treasury yields can increase the opportunity cost of holding non-yielding assets such as gold, while a stronger dollar can make dollar-denominated bullion more expensive for buyers using other currencies.
Gold Extends Decline From Earlier 2026 High
Monday’s decline pushed spot gold below $4,200 an ounce and outside the $4,230-$4,510 range that had prevailed earlier in the month.
The metal also remained below the record level of almost $5,600 reached in January, according to the source.
ANZ said higher bond yields and a stronger US dollar were creating a challenging macroeconomic backdrop for gold. The bank also noted continued demand through exchange-traded funds, saying gold ETF holdings had increased by around 50 tonnes so far during the month.
Separate World Gold Council data showed that global gold-backed ETF holdings rose by 121 tonnes during August to a record 4,189 tonnes, reflecting continued investment demand entering September.
US Economic Data in Focus
Investors are also monitoring US economic data for further indications of the likely direction of monetary policy.
US consumer sentiment weakened in September to a four-month low, according to the source, amid concerns about prices and the broader economy.
US Treasury Secretary Scott Bessent has called for the Fed to remain open-minded on interest rates, arguing that productivity improvements associated with artificial intelligence and deregulation could help limit inflationary pressures.
Markets will next assess August personal consumption expenditures inflation data and the September employment report for additional information on inflation and labour-market conditions.
The Federal Reserve’s September projections put median PCE inflation at 3.7% for 2026 and core PCE inflation at 3.4%, while the central bank continues to target inflation of 2% over the longer term.