Gold prices retreated on Monday, giving back last week's modest gains, as traders weighed persistent inflation risks against the Federal Reserve's freshly implemented rate hike cycle. Spot gold fell as much as 0.7% to dip below $4,350 per ounce, unwinding the small advance seen in the prior week, after the Fed delivered its first rate increase since 2023 in a clear signal that its anti-inflation campaign is now underway.
The Fed voted unanimously to raise interest rates by 25 basis points at its September 15-16 meeting, and several policymakers are scheduled to speak publicly this week. The move aims to curb inflation, which has remained above the Fed's 2% target for more than five years. Minneapolis Fed President Neel Kashkari was the first to break cover, saying on Sunday that inflation remains too high and that price pressures extend well beyond the oil price shock stemming from the Iran conflict. "What Americans feel in their daily lives goes far beyond just gasoline prices; inflation has seeped into every corner of the economy," he said in a television interview.
Chicago Fed President Austan Goolsbee is slated to speak later Monday, with New York Fed President John Williams scheduled for Tuesday. Meanwhile, Brent crude fell for a fourth consecutive session but held above $100 per barrel, as traders monitored diplomatic efforts aimed at ending the U.S.-Iran hostilities. President Donald Trump said in a Fox News interview that he would "most likely" be willing to meet with Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly in New York.
Adding to the supply-side picture, U.S. Central Command chief General Brad Cooper noted that crude and LNG flows through the Strait of Hormuz have reached their highest levels in six months over the past two weeks. Despite Trump's repeated calls for rate cuts, Fed Chair Kevin Warsh's decision to hike last week has soothed investor concerns. Justin Lin, an analyst at Global X ETFs, commented: "With the Warsh hike now in the rearview mirror, the market has largely moved past the Fed independence debate, and forward guidance on rates came in broadly as expected. Gold lacks a clear directional catalyst at the moment, with few fresh triggers on the horizon. During this lull, bullion prices are likely to track oil and overall inflation expectations more closely."
At 3:22 p.m. Singapore time, spot gold was down 0.6% at $4,351.98 per ounce. Silver slipped 0.4% to $65.96 per ounce, while platinum held steady and palladium edged higher. The Bloomberg Dollar Spot Index, a gauge of dollar strength, added 0.1%, following a 1.1% gain last week.
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