Gold Prices Drop in New York as Oil Surge Fuels Inflation and Rate Hike Concerns

Gold futures prices in New York experienced a significant decline on July 13th.

The most actively traded August 2026 gold contract on the COMEX division of the New York Mercantile Exchange fell by $120.2, settling at $4,008.7 per ounce, a drop of 2.91%.

Escalating tensions in the Middle East drove oil prices higher, reigniting inflation fears and strengthening market expectations for the Federal Reserve to raise interest rates later this year. During the session, the price of gold hit a low of $3,992.9, a two-week nadir.

A statement by the US President on social media announcing the reinstatement of the "Iran blockade" and a new 20% fee on all cargo transiting the Strait of Hormuz contributed to the market's anxiety. This development, coupled with recent and expanding US military strikes against Iran and retaliatory attacks by Iran on US bases in the Middle East, signaled a heating up of the conflict and significantly boosted international crude oil prices.

Market data showed that international oil prices closed sharply higher by over 9% on the 13th. The August light sweet crude oil contract on the New York Mercantile Exchange settled at $78.14 per barrel, a gain of 9.42%. The September Brent crude oil contract on the London ICE settled at $83.30 per barrel, rising 9.59%.

Regarding Federal Reserve monetary policy, comments from a Federal Reserve Governor on the 13th added to the pressure on gold. He stated that if this week's Consumer Price Index (CPI) data shows an increase, the Fed should consider raising interest rates, noting that a higher core inflation rate "would force the Fed to consider a rate hike in the short term." This hawkish rhetoric contributed to gold's intraday fall below the $4,000 level.

Analysts at Brown Brothers Harriman noted that the prospect of higher interest rates remains the primary headwind for gold. Stabilizing conditions in the US labor market and persistent high inflation are likely to keep the Fed maintaining a hawkish stance on federal funds rate pricing.

Furthermore, this week's release of US inflation data and upcoming Congressional testimony by the Federal Reserve Chair are expected to influence the direction of gold prices.

In related metals trading, the September silver futures contract also declined sharply, falling by 232 cents to settle at $57.980 per ounce, a decrease of 3.85%.