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Gold Plunges to Seven-Week Low as Rate Hike Pressure Mounts Amidst US-Iran Tensions
M
Moneycontrol•29-09-2026, 06:29
Gold Plunges to Seven-Week Low as Rate Hike Pressure Mounts Amidst US-Iran Tensions
- •Gold prices tumbled to a seven-week low, trading around $4,125 an ounce, following a 4% decline on Monday.
- •Elevated energy costs due to the US-Iran deadlock over the Strait of Hormuz are intensifying pressure on the Federal Reserve to hike interest rates.
- •The selloff in the US bond market deepened after President Trump rejected Iran's proposal, pushing Treasury yields higher and undermining non-yielding assets like gold.
- •Gold is down approximately 7% in September after the Fed's first rate hike since 2023, with investors anticipating a 70% probability of another hike in October.
- •Fed Governor Lisa Cook warned that AI productivity gains might not offset near-term price pressures, citing rising electricity and water costs impacting inflation.
Key Questions Answered
Gold is trading near a seven-week low around $4,125 an ounce as persistent energy costs from the US-Iran deadlock maintain pressure on the Federal Reserve to hike interest rates, undermining the appeal of non-yielding bullion.
Heavy data center investments are increasing competition for shared resources like energy and construction labor, driving up electricity and water costs by roughly 5% over the past year and contributing to economy-wide inflation pressures according to Fed Governor Lisa Cook.
Markets are closely watching the personal consumption expenditure data—the Federal Reserve’s preferred inflation gauge—along with non-farm payrolls data to determine the future path of interest rates.
