Gold Prices Fall Amid US Rate Hike Fears and Middle East Tensions

Gold prices continued their downward trend on Monday, pressured by growing fears of an interest rate hike by the US Federal Reserve. A robust jobs report released recently has fueled market expectations of tighter monetary policy, making non-yielding assets like gold less attractive.

Spot gold experienced a 1% drop, reaching $4,287.66 per ounce by 0544 GMT. This decline follows a significant 3% fall on Friday, marking the lowest price level since March 24. US gold futures for August delivery also saw a decrease, down 1.2% to $4,311.

Analysts attribute the pressure on gold to the market's increasing focus on the Federal Reserve's potential hawkishness. Higher Treasury yields further exacerbate the situation. The yield on the benchmark 10-year US Treasury note rose, reaching a two-week high, which increases the opportunity cost for investors holding gold.

Meanwhile, oil prices surged amid renewed hostilities in the Middle East. Israel reported striking military targets in western and central Iran, despite earlier reports of US President Donald Trump advising Israeli Prime Minister Benjamin Netanyahu against further escalation. The rise in oil prices is fanning inflation concerns, creating a complex economic environment.

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It is all based on the hawkishness that the market has started to place on the Fed futures.