Spot Gold Falls as Rising Oil and Dimmed Rate Cut Hopes Weigh

Spot gold prices fell on Monday as rising oil prices and reduced expectations for Federal Reserve interest rate cuts weighed on the metal. This occurred despite escalating tensions between the U.S. and Iran over the weekend.

The precious metal traded lower after crossing below a key 50% level at $4744.34. Traders are now watching the long-term 61.8% level at $4541.88 as the next major target.

While overcoming $4744.34 would signal strength, gold faces resistance at $4850.68 and its 50-day moving average at $4897.91. The 50-day moving average at $4897.95 and the 200-day moving average at $4180.59 define the broader trading range, with $4539.27 as its midpoint.

Geopolitical instability, such as the U.S. naval blockade around Iranian ports, typically boosts gold as a safe haven. However, the resulting surge in WTI crude oil prices above $100 per barrel complicated this.

Higher oil prices fueled inflation concerns, which reduces the likelihood of Federal Reserve rate cuts. This also pushed U.S. Treasury yields higher and strengthened the U.S. Dollar Index, all factors that typically work against gold. Expectations for a December rate cut declined over the weekend, and the stronger dollar makes gold more expensive for international buyers.