Gold eased on Monday, drifting back toward the USD 5,100 per ounce consolidation zone as a firmer US dollar and shifting expectations around Federal Reserve monetary policy weighed on the metal.
Disruptions in the Middle East pushed crude oil prices above USD 100 per barrel for the first time since 2022, reigniting fears of renewed global inflation pressures. Rising energy costs affected the monetary policy outlook and reduced the expectations of near-term rate cuts from the Federal Reserve, leading to higher yields. The latter could continue to weigh on gold, limiting its upside potential.
However, geopolitical tensions continue to provide structural support. Ongoing tensions in Eastern Europe and the Middle East maintain elevated risk premia. Institutional demand also remains resilient, as evidenced by continued ETF inflows and ongoing central bank purchases.
Looking ahead, markets will closely monitor US inflation data later this week, including CPI and PCE releases. These indicators could prove decisive in shaping expectations for monetary policy and gold‘s near-term trajectory.
