Gold slumps over 1% as oil surge fuels rate hike bets

July 13, 2026 (MLN): Gold prices fell more than 1% on Monday as a sharp rise in oil prices strengthened expectations that the U.S. Federal Reserve may keep interest rates higher to counter inflation risks stemming from escalating tensions in the Middle East.

Currently, spot gold is down 1.03% to $4,065.87 an ounce as of [10:08 am] PST, according to data reported by Mettis Global.

The decline came after renewed military exchanges between the United States and Iran over the weekend, according to Reuters. 

Iranian forces launched missile and drone attacks targeting U.S. facilities across Gulf states and reiterated that the Strait of Hormuz had been closed, raising concerns over global energy supplies.

The geopolitical escalation pushed crude oil prices up around 4%, while the U.S. dollar and Treasury yields advanced. Asian equity markets also traded lower as investors shifted toward traditional safe-haven assets amid heightened uncertainty.

Despite gold's status as a safe-haven investment, higher Treasury yields and a stronger dollar weighed on bullion by reducing its appeal as a non-yielding asset.

Investors are closely monitoring the U.S. economic calendar this week for fresh signals on inflation and monetary policy.

Federal Reserve Chair Kevin Warsh is scheduled to deliver his first semiannual testimony before Congress, while key economic indicators, including June consumer price index (CPI), producer price index (PPI), and retail sales data, are due for release.

Markets will also focus on comments from Federal Reserve Vice Chair Michelle Bowman and Governor Christopher Waller for further guidance on the central bank's policy outlook.

According to the CME FedWatch Tool, traders now assign a 72% probability to a Federal Reserve interest rate hike in September, up from around 63% a week earlier, showing growing expectations that persistent inflationary pressures could delay monetary easing.

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