Gold prices plunged as the deadlock in the Strait of Hormuz kept energy costs elevated, continuing to pressure the Federal Reserve to further raise interest rates to combat persistent inflation. Gold dropped as much as 1.8%, falling below $4,206 per ounce—more than 2% lower than last week’s close.
Iran stated it would not soften its conditions for reopening the Strait of Hormuz after U.S. President Trump rejected its seven-day proposal. Iran told Axios that it expects talks to resume this week.
Gold remains highly sensitive to oil prices and shifts in market expectations regarding a potential resolution in the Middle East. Until the outcome of the Iran conflict becomes clearer, most gold buyers are likely to remain on the sidelines.
Meanwhile, sellers are primarily focused on real yields, which have continued rising. The yield on two-year U.S. Treasury notes rose 5 basis points to 4.90%, while the ten-year note climbed 4 basis points to 5.20%.
“Persistent hawkish rhetoric from the Fed and oil prices above $100 were key drivers behind the gold decline,” said Damian McLaughlin, head of fixed income research at Westpac.
“President Trump’s rejection of Iran’s diplomatic offer has pushed oil prices higher again and put pressure on U.S. Treasuries,” said Prashant Newnaha, senior Asia-Pacific interest rate strategist at TD Securities. “The Middle East standoff may remain a market focus until later this week when personal consumption expenditure (PCE), ISM manufacturing data, and non-farm payroll figures are released.”
On Sunday, Trump told Axios that the conditions proposed by Iran were something Washington might have accepted about a year ago, calling Tehran’s demands excessive. According to Axios, the U.S. president added that although he rejected Iran’s latest offer, he expects negotiations to resume this week.
Plugin Case Examples
Gold: Price sharply broke below the key support zone of 4250/60 and is now testing below 4200. Intraday priority is on corrective rebounds, but upside potential is likely limited around 4250/60.
(Gold 15-minute chart)
Nasdaq: The yellow plugin alert provided before the holiday perfectly illustrated a V-shaped rebound following liquidity sweep. Today, we continue monitoring the liquidity reaction around the 30,200/30,300 area; after testing, watch for rebound signals.
(Nasdaq 15-minute chart)
Crude Oil: After expanding, the price has shifted into a converging pattern. A breakout on either side should be watched closely, as it could trigger a momentum-driven move. Trading strategy: wait for confirmation of breakout and then follow the trend.
(Crude Oil 15-minute chart)
Key Financial Data and Events Today:
18:00 UK Deputy Governor Ramsden speaks on quantitative tightening.
22:30 US Dallas Fed Business Activity Index for September
