Key Takeaways

• Gold falls: Spot gold dropped 0.8% to $4,501.54 per ounce, while U.S. gold futures declined 1.3% to $4,532.22.
• Previous week ended with marginal gains: Last week’s ceasefire extension hopes briefly supported bullion.
• Weekend strikes resume: The U.S. hit Iranian air-defense and drone facilities after Iran allegedly downed a U.S. drone.
• Iran retaliates: Tehran attacked a U.S.-used air base, while regional air defenses intercepted missiles and drones.
• Israel escalates in Lebanon: Troops pushed deeper into southern Lebanon as fighting with Hezbollah intensified.
• Ceasefire talks stall: Key issues remain unresolved; final deal still requires Trump’s approval.
• Oil rebounds: Crude prices jumped on the renewed military action, reinforcing energy cost and inflation concerns.
• Rate hike bets mount: Investors who once expected a Fed cut now increasingly price in further tightening.
• Dollar firms: DXY edged up 0.1%, making gold pricier for overseas buyers.
• Two-month low last week: Gold hit its weakest level in two months before recovering on peace deal optimism.
• Fed speakers and jobs data ahead: Markets are watching for rate clues from Fed officials and labor market indicators.
• Silver rises: Spot silver edged up 0.5% to $75.69 per ounce.
• Platinum gains: Platinum rose 1.1% to $1,940.95 per ounce.
• Copper firms: LME copper gained 0.3% to $13,663.33 per ton.

Gold prices fell on Monday as fresh military exchanges between the United States and Iran dampened ceasefire negotiation hopes, reinforcing inflation fears that have fueled expectations of a Federal Reserve rate hike this year.

Spot gold fell 0.8% to $4,501.54 an ounce by 02:57 ET (06:57 GMT), while U.S. gold futures declined 1.3% to $4,532.22 per ounce.

The precious metal ended the previous week with marginal gains on hopes of a U.S.-Iran ceasefire extension.

Weekend Strikes Shatter Peace Optimism

The U.S. military said it struck Iranian military sites over the weekend, targeting air-defense and drone-related facilities after Iran allegedly downed a U.S. drone.

Tehran responded by attacking an air base used by U.S. forces, while regional air defenses intercepted missiles and drones.

At the same time, Israel ordered troops deeper into southern Lebanon as fighting with the Iranian-backed Hezbollah group intensified.

While reports last week suggested both sides were discussing an extension of a temporary truce and the reopening of shipping routes through the Strait of Hormuz, key issues remain unresolved, and any final agreement still requires approval from U.S. President Donald Trump.

Inflation and Rate Fears Weigh on Bullion

Crude prices rebounded on Monday after the latest military moves, reinforcing concerns that energy costs could remain high and complicate the Fed’s inflation fight.

Investors have increasingly shifted focus toward the possibility of further U.S. monetary tightening — a stark reversal from the rate cut expectations that prevailed before the war began.

Higher interest rates tend to weigh on non-yielding assets such as gold.

The U.S. Dollar Index edged up 0.1% in Asian hours, also pressuring bullion by making it costlier for buyers using other currencies.

Gold has struggled in recent sessions despite its traditional role as a hedge against geopolitical uncertainty and inflation. The metal fell to a two-month low last week before recovering as ceasefire talks temporarily eased concerns over a broader regional conflict.

Traders are now closely watching speeches from Federal Reserve officials and upcoming U.S. economic data, including labor market indicators, for further clues on the interest-rate outlook.

Among other precious metals, silver prices edged up 0.5% to $75.69 per ounce, while platinum rose 1.1% to $1,940.95 per ounce.

Benchmark copper futures on the London Metal Exchange edged up 0.3% to $13,663.33 a ton, while U.S. copper futures also gained 0.3% to $6.44 a pound.