HG MARKETS: 

Gold prices extended their decline on Monday, slipping below $4,300 per ounce and touching their lowest level in more than two months. The precious metal remained under pressure as investors balanced escalating geopolitical tensions in the Middle East against a growing expectation that U.S. interest rates could remain higher for longer. Despite gold’s traditional role as a safe-haven asset, concerns over monetary policy continued to dominate market sentiment.

The latest weakness in gold came after Iran and Israel exchanged missile strikes over the weekend, raising fears of a broader regional conflict. The renewed hostilities have increased uncertainty across global markets and cast doubt on efforts to secure a diplomatic breakthrough. Investors are closely monitoring developments, as any further escalation could have significant implications for energy markets and global economic stability.

Adding to the uncertainty, U.S. President Donald Trump urged both sides to avoid further military action and emphasized that negotiations toward a new 60-day ceasefire agreement with Tehran remain ongoing. While diplomatic efforts continue, market participants remain cautious, as the success or failure of these talks could influence risk sentiment and commodity markets in the coming weeks.

Meanwhile, the prolonged conflict and the continued near-closure of the Strait of Hormuz have disrupted energy shipments from the Persian Gulf, one of the world’s most important oil-exporting regions. These supply concerns have supported crude oil prices, which moved higher on fears of tighter global supplies. Rising oil prices have also increased concerns about inflation, as higher energy costs can feed through to transportation, manufacturing, and consumer prices worldwide.

At the same time, stronger-than-expected U.S. employment data weighed heavily on bullion prices. The latest labor market report pointed to continued economic resilience, prompting investors to reassess the outlook for Federal Reserve policy. Markets are now pricing in roughly a 70% chance of a Fed rate hike in December, up from around 50% before the jobs report. Higher interest rates typically reduce the attractiveness of non-yielding assets such as gold, as investors can earn better returns from interest-bearing investments. As a result, expectations of tighter monetary policy remained a key factor driving gold prices lower despite elevated geopolitical risks.