Gold Prices Slip as Strong Dollar and Hawkish Fed Pressure Bullion

Gold prices declined on Monday as the U.S. dollar climbed to a nearly eight-week high, putting pressure on bullion following the Federal Reserve’s latest interest rate hike. Falling oil prices and easing concerns over Middle East energy supplies helped limit losses.

Spot gold fell 0.8% to $4,343.73 an ounce, while U.S. gold futures dropped 1% to settle at $4,381.00.

Investors continued to assess the Federal Reserve’s decision last week to unanimously raise the federal funds rate to 3.75%-4.00% from 3.50%-3.75%, marking its first increase in more than three years.

Fed Chair Kevin Warsh said inflation remained too high, reinforcing expectations that monetary policy could stay tight. The Fed’s latest economic projections showed at least 12 FOMC members anticipate another rate hike this year.

Higher interest rates typically pressure non-yielding assets such as gold while supporting the U.S. dollar, making dollar-denominated bullion more expensive for overseas buyers.

The Fed’s move followed rate increases from the European Central Bank and Bank of Japan, with policymakers responding to renewed inflationary pressures driven partly by elevated energy costs. JPMorgan analysts said recent central bank decisions reflect growing concern about persistent inflation and increased confidence in economic resilience.

Meanwhile, Brent crude briefly dropped below $100 per barrel before settling 3.2% lower at $100.14. Oil prices weakened after U.S. Central Command said more than 1 billion barrels of crude had passed through the Strait of Hormuz in recent months, easing fears of severe supply disruptions.

Saudi Arabia has also increased east coast exports and permitted ship-to-ship transfers near Oman following the shutdown of its East-West Pipeline. Kpler data showed Saudi oil exports recovering to just above 4 million barrels per day in September from 2.4 million bpd in August.

Diplomatic hopes added pressure to crude prices. Markets are watching for possible U.S.-Iran discussions during the United Nations General Assembly, while President Donald Trump is also expected to meet Chinese President Xi Jinping. China remains the largest buyer of Iranian crude, making potential Trump-Xi discussions on Iran closely watched by energy markets.