Gold prices remained largely unchanged on Monday, with spot gold at $4,018.19 per ounce and U.S. gold futures for August delivery gaining 0.1% to $4,023. This stability comes as markets assess the escalation of the Middle East conflict, which has propelled oil prices higher, and the increasing likelihood of a U.S. Federal Reserve interest rate hike. Cleveland Fed President Beth Hammack joined other policymakers in suggesting that rate hikes might be necessary to control persistent inflation, setting the stage for a debate at the Fed's July 29 meeting. Traders are now pricing an 82% chance of a December interest-rate hike, up from 73% last week, according to the CME FedWatch tool.
The Middle East conflict, specifically renewed U.S. strikes against Iran and an Iranian retaliation, has pushed crude oil prices back above $90 a barrel. This geopolitical tension is a double-edged sword for gold; while it typically acts as a safe-haven asset, the resulting higher oil prices fuel inflation fears. These inflation concerns, in turn, reinforce expectations of higher-for-longer interest rates. Higher interest rates generally increase the opportunity cost of holding non-yielding assets like gold, capping its upside potential. Kelvin Wong, a senior market analyst at OANDA, expressed caution on gold in the longer term, identifying $3,886 as a key support level, a breach of which could lead to further weakness towards $3,500.
Despite the immediate geopolitical and monetary policy headwinds, analysts note that gold has found significant support around the $4,000 level. Brian Lan, GoldSilver Central Managing Director, indicated that this level has proven important, suggesting underlying support for the metal. Silver, platinum, and palladium all saw gains, with spot silver up 1.8% to $56.91 per ounce, platinum rising 0.8% to $1,603.99, and palladium increasing 1.2% to $1,263.14. However, Heraeus analysts highlighted that gold has been largely range-bound between $3,950 and $4,200 an ounce since the Fed's June meeting, with recent positive inflation data failing to significantly shift market sentiment due to ongoing concerns about the Iran conflict and the Fed's hawkish stance.
India's recent import restrictions on silver have created a tight domestic market, leading to significant premiums. Indian silver imports for June were 1.0 moz, an 84% decrease from 6.3 moz in June 2025, due to higher import duties and restrictions. This has pushed Indian silver premiums to around $6.50 per ounce over official domestic prices, representing more than 10% above benchmark prices, despite relatively weak demand.
ANZ analysts observed that expectations for a Fed rate hike at the July 29 meeting briefly rose to around 40% after the Middle East escalation but then eased to roughly 10%. They anticipate that the Fed will likely maintain current rates throughout the year unless higher energy prices lead to broader inflationary effects, and predict gold will find support between $3,800 and $4,000 per ounce as policy tightening expectations ease.
