TLDR
- Gold recovered after hitting an 11-week low, trading up 0.3% at around $4,343 an ounce Monday
- Iran announced an end to military operations against Israel, easing geopolitical tensions briefly
- Oil prices pulled back after the news, reducing fears of an inflation surge
- A strong U.S. jobs report last week fueled bets on a Fed rate hike, pushing gold lower Friday
- China’s central bank added 10 tons of gold to reserves in May, its highest monthly total since 2024
Gold prices bounced Monday after Iran said it had ended military operations against Israel, briefly calming markets that had been rattled by a fresh round of strikes between the two countries.
Spot gold was up 0.3% at $4,343.70 an ounce as of mid-morning in New York. The metal had earlier fallen as much as 1.4%, touching its lowest point since March 23.
The recovery came after Iran’s central military command confirmed the end of operations via the semi-official Fars news agency. However, Iran warned that further Israeli attacks would bring “much harsher and more crushing actions.”
Middle East Conflict Drives Volatility
The latest flare-up began with an Israeli strike on Beirut. Iran responded with its own strikes, and Israel hit back, targeting sites in central and western Iran.
It was the first time the two countries had attacked each other since a fragile ceasefire took effect in April.
The exchange marked the worst escalation in regional hostilities since the truce was agreed. Gold had fallen nearly 5% last week as a result.
Oil prices had risen sharply on the tensions before paring gains after the ceasefire news. The conflict has disrupted energy flows through the Strait of Hormuz for four months, pushing oil higher and stoking inflation fears.
Yemen’s Iranian-backed Houthis added to the pressure, announcing a blockade of Israeli ships in the Red Sea on Monday.
Jobs Data and Fed Rate Bets Weigh on Gold
Gold also came under pressure from a strong U.S. jobs report released Friday. The U.S. economy added 172,000 jobs in May, beating forecasts, while the unemployment rate held at 4.3%.
The data pushed traders to price in a Fed rate hike at the December meeting. ING analysts said in a note that a December hike is now “fully priced.”
Higher interest rates are a headwind for gold, which pays no yield. U.S. Treasury yields and the dollar both climbed after the report.
The U.S. dollar index pulled back slightly Monday after hitting a two-month high Friday. A weaker dollar can support gold prices by making the metal cheaper for overseas buyers.
Investors are now watching U.S. consumer and producer price data due later this week for more clues on inflation.
China Keeps Buying
One supportive factor for gold is continued buying from China. The People’s Bank of China added around 10 tons to its reserves in May, the highest monthly total since 2024.
That extends China’s gold buying streak to 19 consecutive months.
StoneX analyst Rhona O’Connell said key issues from the Middle East conflict remain “unresolved,” and that the firm maintains a “downward bias” but is watching for bargain hunting.
Silver rose 0.5% to $68.19 an ounce Monday, after dropping nearly 10% last week.
🚨 Our MAY Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for May, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
