Gold eases amid rising oil prices

June 29, 2026 (MLN): Gold prices edged lower on Monday as renewed military tensions between the United States and Iran lifted crude oil prices, strengthening expectations that inflation could remain elevated and prompting investors to reassess the outlook for U.S. interest rates.

Currently, spot gold is down 0.57% to $4,048.48 an ounce as of [10:43 am] PST, according to data reported by Mettis Global.

Market sentiment turned cautious after both Washington and Tehran reportedly carried out fresh military strikes over the weekend, raising concerns that geopolitical risks could keep energy prices elevated for longer, according to Reuters.  

Higher oil prices are widely viewed as inflationary, increasing the likelihood that the U.S. Federal Reserve may maintain a tighter monetary policy stance.

Since gold does not generate interest income, expectations of higher borrowing costs generally reduce its attractiveness relative to interest-bearing assets.

Oil prices advanced after Iran reportedly launched missiles and drones targeting U.S. military facilities in Kuwait and Bahrain on Sunday, following comments by U.S. President Donald Trump threatening severe action against Iran's leadership if it failed to uphold an agreement aimed at ending the conflict.

Despite the flare-up, diplomatic efforts showed signs of progress. According to an Axios report, the United States and Iran later agreed to suspend recent hostilities in the Gulf and resume negotiations over their dispute involving the Strait of Hormuz, easing concerns of a prolonged regional conflict.

Markets are also closely watching the Federal Reserve's policy outlook. Traders currently expect the U.S. central bank to deliver three interest rate hikes this year, with the CME FedWatch Tool indicating an approximately 80% probability of another increase in December.

Investor attention has now shifted to upcoming U.S. economic releases, including June's ADP private employment report and the closely watched nonfarm payrolls data later this week, which are expected to provide fresh clues on the Fed's next policy moves.

Looking ahead, Waterer noted that gold could revisit the $5,000 per ounce level before the end of the year if geopolitical tensions ease, crude oil retreats to pre-conflict levels, inflationary pressures moderate, and the U.S. dollar weakens, creating a more supportive environment for the precious metal.

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