Monday (September 28) early Asian session.
Spot gold opened slightly lower and quickly weakened, falling more than 0.67% intraday to $4,257.33 per ounce, extending the weak trend from last week's weekly decline.
Market sentiment clearly turned cautious, with the dollar index rebounding about 0.15% in early trading and oil prices opening more than 1% higher, jointly weighing on gold prices.
The real driving force behind this is the geopolitical risk repricing signal released by Trump's refusal of Iran's proposal to reopen the Strait of Hormuz, as well as the reinforced expectations of further Federal Reserve tightening.
Gold, as a traditional safe-haven asset, is now caught in a double tug-of-war between "safe-haven demand and interest rate suppression."
Escalating Geopolitical Game: Trump Refuses to Discuss Reopening Strait, Dollar and Oil Prices Join Forces to Apply Pressure
The direct catalyst for this round of gold price decline came from Trump's clear rejection over the weekend of Iran's proposal.
Iran had previously proposed through channels including Qatar to reopen the Strait of Hormuz within seven days after verification and promote a regional ceasefire, while demanding the unfreezing of at least $12 billion in assets frozen since 1979, the lifting of sanctions on Iranian oil, and an end to the war in Yemen.
Trump said in an interview that this was not a deal he was willing to accept, and claimed that Iran was eager to compromise because it had suffered a crushing defeat and had overestimated its bargaining chips.
He also stated that negotiations with Iran are expected to resume within days, but remained open on whether to resume bombing, saying "I've been thinking about it," and reportedly may act after the November midterm elections.
This statement quickly transmitted to financial markets.
The dollar index recovered part of Friday's losses in early trading, with its safe-haven attributes strengthened; meanwhile, oil prices opened more than 1% higher, reflecting market concerns that tensions in the strait persist and supply risks have not been removed.
The Strait of Hormuz handled about one-fifth of global oil and gas transportation before the conflict and remains the core of tensions.
Iran reiterated that it will not back down from its conditions, emphasizing that diplomacy is the only way out, but also acknowledged that it has not yet received formal feedback on the U.S. position.
This stalemate of "talking without breaking, breaking without talking" makes it difficult for the market to price in a genuine fading of the risk premium.
Although gold theoretically benefits from geopolitical uncertainty, its safe-haven luster has been significantly weakened against the backdrop of a stronger dollar and rising oil prices simultaneously pushing up inflation expectations.
Investors prefer to hold assets that can generate returns rather than zero-yield gold.
Macro Pressure Continues to Accumulate: Surging Yields and Hawkish Signals Reduce Gold's Appeal
From a longer-cycle perspective, gold prices fell about 2.1% last week, with spot gold closing near $4,285.90 per ounce last Friday (September 25), down about 19% from its February high.
The core reason lies in continuously rising U.S. Treasury yields — the 10-year Treasury yield hit its highest level in 19 years, significantly raising the opportunity cost of holding non-yielding gold.
After the Federal Reserve raised rates by 25 basis points last week, officials released consistent hawkish signals, with market pricing for further rate hikes in October and December rising to 66% and 93% respectively.
Energy prices remain elevated due to the Middle East conflict, further exacerbating upside inflation risks and forcing central banks to maintain a tightening framework.
Gold has always been regarded as an inflation hedge, but during periods of rapidly rising interest rates, this attribute often gives way to funding cost considerations.
Analysis noted that surging Treasury yields have caused gold to record a weekly decline for the fourth time in the past five weeks.
Although negotiators in New York are reportedly still exploring a path to end the conflict in phases, including reopening the strait and lifting the economic blockade, actual progress has been slow, and although oil prices have pulled back, they remain at high levels, with supply concerns not fundamentally resolved.
Although the dollar edged lower on Friday, it still rose nearly 1% for the week, strengthening for a second consecutive week and further suppressing dollar-denominated gold.
Market concerns about the U.S. fiscal situation and policy unpredictability have created some divergence between rising yields and the dollar's rally, but have not changed the multiple adverse factors facing gold.
Key Data and Events Take the Stage in Dense Fashion This Week, Gold Prices May Face a Volatility Window
Looking ahead to this week, the market will simultaneously face the U.S. nonfarm payrolls report, the Reserve Bank of Australia's rate decision, and speeches from central bank officials of multiple countries, with the U.S.-Iran situation remaining an important variable.
The U.S. economic data calendar is dense, including consumer confidence, JOLTS job openings, the PCE price index, and nonfarm payrolls, with the market expecting about 100,000 new nonfarm jobs in September and the unemployment rate possibly rising slightly to 4.2%.
If the data comes in stronger than expected, it will further reinforce the Federal Reserve's tightening path and pose additional pressure on gold prices; conversely, it may provide a brief respite.
The Reserve Bank of Australia's decision and subsequent CPI data, as well as eurozone inflation and sentiment indicators, will also indirectly affect gold through exchange rate and risk appetite channels.
At the same time, indirect U.S.-Iran talks may begin as early as this week, still mediated by Qatar.
If negotiations make substantive progress and the risk to strait navigation decreases, falling oil prices may ease inflation concerns, thereby reducing pressure on gold prices; but if Trump continues to send tough signals or the conflict escalates again, the linked rise in the dollar and oil prices may still dominate short-term trends.
Gold is currently in a tug-of-war between "geopolitical support and macro suppression," and any marginal change on either side could trigger significant volatility.
In summary, Trump's refusal of Iran's proposal to reopen the strait has strengthened the dollar's safe-haven appeal and oil price support in the short term, and combined with elevated U.S. Treasury yields and the Federal Reserve's hawkish stance, gold's appeal continues to be under pressure.
However, uncertainty in the Middle East situation and potential negotiation windows remain, and gold's status as the ultimate safe-haven asset has not been completely denied.
Investors need to closely monitor this week's U.S. employment data and the progress of U.S.-Iran interactions, remaining cautious in a high-volatility environment, being alert to downside risks from further interest rate increases while also watching for oversold rebound opportunities that may arise from geopolitical easing.
Whether gold prices can stabilize ultimately still depends on the market's repricing of the balance between "higher interest rates" and "higher risks."
As of 07:21 Beijing time, spot gold was quoted at $4,265.22 per ounce.
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