GOLD STARTS WEEK WITH SHARP DECLINE AS OIL, INTEREST RATE PRESSURES STRENGTHEN

Mon 28 September 2026:

Gold prices started the week with a sharp decline as rising oil prices increase inflation concerns and expectations for the Fed interest rate policies tighten.

Selling pressure stood out in the first transactions of the new week in the gold market; an ounce of gold retreated to $4,170 per ounce with a 2.6% loss on the first trading day of the week, as of 0640GMT.

Oil prices rose following reports that US President Donald Trump rejected an offer to reopen the Strait of Hormuz and end the conflicts.

Brent futures are traded for $107 per barrel, up 2.6%, while WTI is at $94, up 1.5%

Expectations that high energy prices could keep inflationary pressures elevated by increasing production and consumption costs put pressure on gold, along with high US bond yields.

Trump rejected a seven-day cease-fire offer made by Iran through mediators to open the Strait of Hormuz to shipping traffic, adding that Iran’s offer was unacceptable.

Investors shifted their focus to the interest rate path in upcoming meetings after the Fed increased the policy rate by 25 basis points to the 3.75% to 4% range at its meeting this month.

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Global markets come under selling

Global markets came under selling pressure at the start of the new week after US President Donald Trump rejected Tehran’s seven-day ceasefire proposal to reopen the Strait of Hormuz to vessel traffic.

Expectations that geopolitical risks could be resolved via the 81st session of the UN General Assembly held last week boosted risk appetite, driving up global markets.

Following Trump’s rejection, November-delivery Brent crude rose 2.5% to $109.6 a barrel, as expectations of a near-term US-Iran ceasefire faded.

The US 10-Year Treasury yield hit its highest level since 2007 at 5.23% on Sept. 25, stabilizing at 5.21% on Monday.

The two-year yield rose by four basis points to 4.91%, while the 30-year yield saw its highest level since 2004 at 5.53% on Sept. 25, stabilizing at 5.51% on Monday.

Rising global bond yields continue to drive up the borrowing costs of tech firms as they scramble to fund their artificial intelligence (AI) efforts worth billions of dollars.

The selling pressure in the bond markets could continue until clear signs emerge that financial conditions have sufficiently tightened, analysts say.

The US Dollar Index is trading up 0.1% at 101.1, while gold is down 2.1% at $4,196 per ounce on Monday amid the US-Iran tensions.

The Fed is 68% likely to hike rates in October, money market estimates show.

-Source: AA

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