Gold drops early Monday as the dollar climbed along with oil prices on renewed Mideast tensions, increasing fears of a closure of the Strait of Hormuz, the transit point for a significant amount of the works oil, amid fresh U.S. strikes on Iran.
The worsening tensions in the Middle East and signs that the conflict may be prolonged caused the U.S. currency to strengthen, making dollar-denominated gold more expensive to holders of other currencies. The U.S. dollar has been the haven asset of choice since the conflict with Iran began in late February.
The Mideast tensions added to concern about inflation as economists raised bets of an upcoming Federal Reserve interest rate increase. The first inflation reports for June are due out this week. Both the consumer price index data on Tuesday and the producer price index report Wednesday will be closely watched by investors.
August gold futures fell 0.3% last week to settle at $4,113.70 an ounce on Comex after the front-month contract lost 0.7% Friday. Bullion slid 12% in June after dropping 0.8% in May and losing 1% in April. It decreased 7% in the first half of 2026 after rallying 64% last year.
The U.S. said late Sunday that it had struck dozens of military targets in Iran, a sign that a tentative ceasefire between the two nations was continuing to fall apart. Iran’s military also said it was carrying out retaliatory strikes against American targets in the Middle East.
Negotiations have fallen apart over safe, toll-free traffic of vessels through the Strait of Hormuz. Economists forecast that the resulting high oil prices may force the Fed to boost interest rates to combat inflation. Higher interest rates would make gold a less attractive investment than some other assets.
The Fed last month held interest rates steady at 3.5% to 3.75%, as expected, but signaled growing support for a rate hike in 2026. Minutes of last month’s Fed policy meeting, released Wednesday, reflected growing concern about inflation and different economic scenarios that might warrant a rate hike.
Over 65% of investors tracked by the CME FedWatch Tool are betting on interest rates staying unchanged in July with 34% predicting a rate hike and over 70% are predicting a rate hike in September. The Fed has kept interest rates unchanged this year after three previous rate cuts.
Front-month silver futures tumbled 1.5% last week to settle at $60.17 an ounce on Comex after the September contract retreated 1% Friday. The most-active contract touched a record above $115 in January. Silver declined 21% in June after gaining 2.5% in May and losing 1.2% in April. It lost 15% in the first half of 2026 after rising 141% last year. The September contract is currently down $1.315 (-2.19%) an ounce to $58.850 and the DG spot price is $58.57. The August contract is currently down $44.40 (-1.08%) an ounce to $4069.30 and the DG spot price is $4059.00.
Spot palladium increased 0.8% last week to $1,285.00 an ounce after rising 1.8% Friday. Palladium dropped 11% last month after losing 12% in May and rising 3.2% in April. It retreated 25% in the first half of 2026 after rising 74% last year. Currently, the DG spot price is down $5.30 an ounce to $1276.00.
Spot platinum rose 0.4% last week to $1,627.00 an ounce after gaining 0.1% Friday. Platinum tumbled 19% in June after dropping 3.2% in May and gaining 1.3% in April. Platinum slid 23% in the first half of 2026 after increasing 122% in 2025. The DG spot price is currently up $8.50 an ounce to $1633.50.
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