| Gold dropped - following a weekly decline - as an impasse over the Strait of Hormuz kept energy costs elevated and maintained pressure on the Federal Reserve to raise interest rates further to combat sticky inflation. Bullion was trading around $4,265 an ounce, after ending the previous week down more than 2%. Oil rose as Iran said it won't soften its conditions for reopening the waterway after US President Donald Trump rejected its seven-day proposal to do so, telling Axios he expects negotiations to resume this week. The US-Iran conflict is entering its eight month, with Brent crude up 70% this year. Cleveland Fed President Beth Hammack said Friday that long-term Treasury yields are being driven higher by a stronger growth outlook, concerns about government debt and expectations for additional interest-rate increases. Fed officials voted unanimously mid-month to raise their benchmark interest rate by a quarter percentage point, and several have since pointed to signs that more rate hikes may be needed. Investors see about a 65% probability of a hike in October. US consumer sentiment fell in September to a four-month low. In the bond market, the extra yield investors demand to hold 10-year Treasuries over two-year notes shrank to as little as 17 basis points last week, the slimmest gap since early 2025. This so-called flattening of the curve increases the possibility that it will soon yield less than shorter maturities, a phenomenon watched as an indicator of recession. Gold has traded in relatively narrow range between $4,230 and $4,510 an ounce this month as traders repeatedly recalibrate the outlook for Fed policy, well below a record high of almost $5,600 reached in January. This has not dissuaded dealmaking in the sector, with South Africa's Gold Fields Ltd. making an approach to acquire Australia's biggest gold miner Northern Star Resources Ltd., a potential blockbuster deal the latter rejected on Monday. Spot gold fell 0.5% to $4,261.59 an ounce at 7:56 a.m. in Singapore. Silver was down 0.8% to $63.77 an ounce, after declining 3% last week. Platinum and palladium were lower. The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.1% after rising 2% since the start of the month. |
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