TLDR
- Gold fell 3% on Monday, hitting a seven-week low of $4,156.45 per ounce.
- Rising oil prices tied to the Iran-US standoff over the Strait of Hormuz are fueling inflation fears.
- Traders now see a 70.3% chance the Fed will hike rates again in October.
- Silver dropped nearly 5%, while platinum and palladium also declined.
- Markets are watching this week’s PCE inflation data and the September jobs report for more clues.
Gold prices dropped sharply on Monday, falling 3% to touch their lowest level in more than seven weeks. Spot gold traded at $4,156.45 per ounce, while US gold futures for December delivery fell 3.1% to $4,188.80.
The slide comes after gold already lost more than 2% last week. Higher oil prices and growing bets on another Federal Reserve interest rate hike are the main forces pushing the metal lower.
Oil Prices Rise on Iran Tensions
Brent crude oil rebounded after President Donald Trump rejected a peace proposal from Iran. The deal would have resolved the ongoing conflict and reopened the Strait of Hormuz, a key route for global oil supplies.
JUST IN: 🇸🇦🇺🇸 Saudi Arabia's oil exports hit highest level since Iran war began as shipments increase through new US-secured Strait of Hormuz route.
Saudi's crude oil exports increased almost 80% this month to 6 million barrels per day, despite a drone attack that knocked the… pic.twitter.com/uu84HvmD8l
— Watcher.Guru (@WatcherGuru) September 27, 2026
Iran said it would not soften its conditions for reopening the waterway. Trump said he still expects talks with Tehran to resume this week, but for now the standoff continues.
The US-Iran conflict has now stretched into its eighth month. Brent crude has climbed about 70% so far this year.
Rising energy costs tend to push inflation higher because they raise prices across many parts of the economy. That is adding pressure on the Fed to keep interest rates elevated.
Fed Rate Hike Odds Climb
Traders now see a 70.3% chance that the Federal Reserve will raise interest rates again in October, according to CME’s FedWatch Tool. The central bank already raised its benchmark rate by a quarter percentage point earlier this month.
Several Fed officials have said more rate increases could be needed. Cleveland Fed President Beth Hammack said she is concerned that persistently high inflation could condition the public to accept elevated prices as normal. She said the central bank cannot let that happen.
Hammack also said long-term Treasury yields are being pushed higher by stronger growth expectations, worries over government debt, and expectations for more rate hikes.
Higher interest rates make gold less attractive to investors. That is because gold does not pay any interest or yield, so when bonds and savings accounts offer better returns, some investors move their money elsewhere.
The US dollar held firm on Monday, which also made gold more expensive for buyers using other currencies. US Treasury yields extended their gains as well.
Other precious metals fell alongside gold. Spot silver dropped 4.8% to $61.17 per ounce. Platinum declined 2.4% to $1,735.88, and palladium lost 2.2% to $1,239.60.
Despite the recent drop, gold remains well below its record high of almost $5,600 reached in January. The metal has traded in a range between roughly $4,230 and $4,510 for most of this month.
Demand for gold exchange-traded funds has stayed strong. Gold ETF holdings have risen by about 50 tonnes this month, even as prices fell.
US consumer sentiment also weakened in September, falling to a four-month low. Rising concerns over prices and the broader economy contributed to the drop.
Treasury Secretary Scott Bessent urged the Fed to stay open-minded on interest rates. He said gains in productivity, driven partly by artificial intelligence and deregulation, could help keep inflation in check.
Markets are now focused on this week’s economic data. Wednesday brings the August PCE inflation report, the Fed’s preferred inflation gauge. Friday’s September jobs report will offer more information on hiring trends.
Both reports are expected to shape expectations for the Fed’s next move on interest rates.
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