Gold declines as Hormuz impasse keeps rate hike bets elevated - The Business Times
[SINGAPORE] Gold dropped – following a weekly decline – as an impasse over the Strait of Hormuz kept energy costs elevated and maintained pressure on the US Federal Reserve to raise interest rates further to combat sticky inflation.
Bullion was trading around US$4,265 an ounce, after ending the previous week down more than 2 per cent.
Oil rose as Iran said it will not soften its conditions for reopening the waterway after US President Donald Trump rejected its seven-day proposal to do so, telling media outlet Axios he expects negotiations to resume this week.
The US-Iran conflict is entering its eighth month, with Brent crude up 70 per cent in 2026 so far.
Cleveland Fed president Beth Hammack said on Friday (Sep 25) that long-term Treasury yields are being driven higher by a stronger growth outlook, concerns about government debt and expectations for additional interest rate increases.
Fed officials voted unanimously mid-September to raise their benchmark interest rate by a quarter percentage point, and several have since pointed to signs that more rate hikes may be needed. Investors see about a 65 per cent probability of a hike in October.
US consumer sentiment fell in September to a four-month low.
In the bond market, the extra yield investors demand to hold 10-year Treasuries over two-year notes shrank to as little as 17 basis points last week, the slimmest gap since early 2025.
This so-called flattening of the curve increases the possibility that it will soon yield less than shorter maturities, a phenomenon watched as an indicator of recession.
Gold has traded in a relatively narrow range between US$4,230 and US$4,510 an ounce in September as traders repeatedly recalibrate the outlook for Fed policy, well below a record high of almost US$5,600 reached in January.
This has not dissuaded dealmaking in the sector, with South Africa’s Gold Fields making an approach to acquire Australia’s biggest gold miner Northern Star Resources, a potential blockbuster deal the latter rejected on Monday.
Spot gold fell 0.5 per cent to US$4,261.59 an ounce at 7.56 am in Singapore. Silver was down 0.8 per cent to US$63.77 an ounce, after declining 3 per cent last week. Platinum and palladium were lower.
The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.1 per cent after rising 2 per cent since the start of September. BLOOMBERG
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