Gold declined as the Strait of Hormuz impasse kept energy prices high and sustained expectations for further Federal Reserve interest rate hikes to combat inflation. Bullion traded around $4,265 an ounce, following a weekly drop of over 2%. Oil rose after Iran refused to ease conditions for reopening the waterway, despite a proposal rejected by US President Donald Trump.

The US-Iran conflict entered its eighth month, with Brent crude up 70% year-to-date. Cleveland Fed President Beth Hammack noted long-term Treasury yields are rising due to stronger growth, debt concerns, and rate hike expectations. Fed officials unanimously raised rates by a quarter point mid-month, with several signaling more hikes may be needed.

Investors see a 65% chance of an October hike. US consumer sentiment fell to a four-month low in September. The 10-year minus 2-year Treasury yield spread narrowed to 17 basis points, the smallest since early 2025, signaling potential curve inversion and recession risks.

Gold traded between $4,230 and $4,510 an ounce this month, well below its January record near $5,600. Despite this, dealmaking continues: South Africa’s Gold Fields Ltd. approached Australia’s Northern Star Resources Ltd., which rejected the offer. Spot gold fell 0.5% to $4,261.59 an ounce in Singapore.

Silver dropped 0.8% to $63.77, platinum and palladium also lower. The Bloomberg Dollar Spot Index rose 0.1%, up 2% monthly.