Gold prices declined in European trading on Monday, extending losses for a fifth consecutive session and hitting their lowest levels in nearly two months, pressured by escalating tensions between the United States and Iran, alongside rising US dollar and global oil prices.

With inflationary pressure increasing on Federal Reserve policymakers, expectations have grown for at least one US interest rate hike this year, as investors await further economic data and Federal Reserve commentary.

Price Overview

• Gold prices today: Gold prices fell 1.3% to $4,480.43, the lowest level since March 30, from an opening level of $4,540.58, while recording an intraday high of $4,559.95.

• At Friday’s settlement, gold prices lost 2.4%, marking a fourth consecutive daily decline, after US 10-year Treasury yields climbed to their highest levels in a year.

• Gold prices lost around 3.7% last week, recording their third weekly decline in a month and the biggest weekly loss since March, due to global inflation concerns and rising expectations for higher interest rates.

US Dollar

The dollar index rose 0.15% on Monday, extending gains for a sixth consecutive session and reaching its highest level in six weeks, reflecting continued broad strength in the US currency against a basket of major and secondary currencies.

The dollar received additional support from rising US Treasury yields, which climbed to their highest levels in a year, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Investors also continue buying the US dollar as a safe haven, as renewed tensions between the United States and Iran pushed oil prices higher and weakened risk appetite amid ongoing bond market selling.

Analysts at Barclays said in a note: “Risk and bond market conditions appear to be deteriorating, and the environment remains supportive for further dollar gains this week.”

They added that signs the Strait of Hormuz could remain closed for a longer period are creating upward pressure, noting that the dollar tends to rise between 0.5% and 1% for every 10% increase in oil prices.

Global oil prices

Global oil prices rose more than 2% on Monday, extending gains for a third consecutive session and reaching their highest levels in two weeks, amid fears of renewed military confrontation between the United States and Iran and the continued closure of the Strait of Hormuz to international oil tankers.

Latest developments in the Iran conflict

• US President Donald Trump issued a stern warning to Iran, saying that “time is running out very quickly to reach a peace agreement, or there will be nothing left.”

• Trump is preparing to hold a key meeting in the White House Situation Room with national security leaders to discuss plans for resuming military strikes against Iranian energy facilities and infrastructure.

• Trump held a phone call lasting more than half an hour with Israeli Prime Minister Benjamin Netanyahu to discuss options for returning to full-scale military action.

• The UAE announced it is investigating the source of the drone attack, while Saudi Arabia intercepted three drones in Iraqi airspace.

• An Iranian official warned of “surprise scenarios” if the United States resumes military strikes against Tehran.

US interest rates

• Data released last week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices increased at the strongest pace in four years, highlighting renewed inflationary pressure on Federal Reserve policymakers.

• According to the CME FedWatch tool, markets are currently pricing in a 45% probability of a Federal Reserve rate hike in December, compared with just over 16% at the beginning of May.

• Markets also increased pricing for the Federal Reserve keeping interest rates unchanged at its June meeting from 93% to 99% last week, while pricing for a 25 basis point rate cut fell from 7% to 1%.

• Investors are closely monitoring further US economic data, in addition to the minutes of the Federal Reserve’s latest meeting scheduled for release on Wednesday, in order to reassess those expectations.

Gold outlook

Edward Meir, analyst at Marex, said: “Precious metals are facing heavy selling pressure for several reasons. The dollar is extremely strong, and we are seeing rising bond yields not only in the United States, but globally as well.”

Meir added: “China has offered little meaningful help in resolving the Middle East conflict, so we continue to see higher crude oil prices, which reinforce inflation expectations, and this has had a significantly negative impact on metal prices.”

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by around 2.57 metric tons on Friday, bringing total holdings down to 1,037.42 metric tons, retreating from 1,039.99 metric tons, which had been the highest level since April 28.

The euro weakened in European trading on Monday against a basket of global currencies, extending its losses for a sixth consecutive session against the US dollar and hitting its lowest level in six weeks, as investors continued buying the US currency as a preferred safe-haven asset amid escalating geopolitical tensions in the Middle East, especially following Trump’s latest warnings to Iran.

Oil prices continue to rise in global markets, increasing inflationary pressure on European Central Bank policymakers and strengthening expectations for a European interest rate hike in June.

Price Overview

• Euro exchange rate today: The euro fell 0.15% against the dollar to $1.1608, the lowest level since April 8, from today’s opening level of $1.1625, while recording an intraday high of $1.1626.

• The euro ended Friday down 0.4% against the dollar, marking its fifth consecutive daily loss, following another sharp rise in US Treasury yields.

• The euro lost 1.35% against the dollar last week, recording its first weekly decline in three weeks and its biggest weekly loss since March, due to fears of a renewed Iran conflict and rising global oil prices.

US Dollar

The dollar index rose 0.15% on Monday, extending gains for a sixth consecutive session and reaching its highest level in six weeks, reflecting continued broad strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, which climbed to their highest levels in a year, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released last week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices increased at the strongest pace in four years, highlighting renewed inflationary pressure on Federal Reserve policymakers.

According to the CME FedWatch tool, markets are currently pricing in a 45% probability of a Federal Reserve rate hike in December, compared with just over 16% at the beginning of May.

Investors also continue buying the US dollar as a safe haven, as renewed Middle East tensions pushed oil prices higher and weakened risk appetite amid ongoing bond market selling.

Opinions and Analysis

• Analysts at Barclays said in a note: “Risk and bond market conditions appear to be deteriorating, and the environment remains supportive for further dollar gains this week.”

• They added that indications the Strait of Hormuz could remain closed for a longer period are creating upward pressure, noting that the dollar tends to rise between 0.5% and 1% for every 10% increase in oil prices.

• Christopher Wong, strategist at OCBC Bank, said: “In the near term, the US dollar may remain better supported on dips if yields stay elevated and markets continue expecting a more hawkish reaction from the Federal Reserve.”

Global oil prices

Global oil prices rose more than 2% on Monday, extending gains for a third consecutive session and reaching their highest levels in two weeks, amid fears of renewed military confrontation between the United States and Iran and the continued closure of the Strait of Hormuz to international oil tankers.

Latest developments in the Iran conflict

• US President Donald Trump issued a stern warning to Iran, saying that “time is running out very quickly to reach a peace agreement, or there will be nothing left.”

• Trump is preparing to hold a key meeting in the White House Situation Room with national security leaders to discuss plans for resuming military strikes against Iranian energy facilities and infrastructure.

• Trump held a phone call lasting more than half an hour with Israeli Prime Minister Benjamin Netanyahu to discuss options for returning to full-scale military action.

• The UAE announced it is investigating the source of the drone attack, while Saudi Arabia intercepted three drones in Iraqi airspace.

• An Iranian official warned of “surprise scenarios” if the United States resumes military strikes against Tehran.

European interest rates

• Amid rising global oil prices, money markets continue to price in more than a 50% probability that the European Central Bank will raise interest rates by 25 basis points in June.

• Investors are awaiting further economic data from the eurozone on inflation, unemployment, and wages in order to reassess those expectations.

The Japanese yen weakened in Asian trading on Monday against a basket of major and secondary currencies, extending its losses for a sixth consecutive session against the US dollar and hitting its lowest level in three weeks, as fears of a renewed Iran conflict drove investors toward the US currency as a preferred safe-haven asset.

Oil prices continue to rise in global markets, increasing inflationary pressure on Bank of Japan policymakers and strengthening expectations for a Japanese interest rate hike in June.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.2% to ¥159.05, the highest level since April 30, from today’s opening level of ¥158.72, while recording an intraday low of ¥158.68.

• The yen ended Friday down 0.25% against the dollar, marking its fifth consecutive daily loss, due to rising US Treasury yields.

• The yen lost 1.3% against the dollar last week, recording its first weekly decline in three weeks and its biggest weekly loss since February, following US inflation data that came in above market expectations.

US Dollar

The dollar index rose 0.15% on Monday, extending gains for a sixth consecutive session and hitting a six-week high, reflecting continued broad strength in the US currency against a basket of global currencies.

The dollar received additional support from rising US Treasury yields, which climbed to their highest levels in a year, as investors bet that the Federal Reserve will raise interest rates at least once this year.

Data released last week in the United States showed consumer prices in April rose at the fastest pace in three years, while producer prices increased at the strongest pace in four years, highlighting renewed inflationary pressure on Federal Reserve policymakers.

According to the CME FedWatch tool, markets are now pricing in a 45% probability of a Federal Reserve rate hike in December, up from just over 16% at the beginning of May.

Investors also continue buying the US dollar as a safe haven, as renewed Middle East tensions helped lift oil prices and reduce risk appetite amid ongoing bond market selling.

Global oil prices

Global oil prices rose more than 2% on Monday, extending gains for a third consecutive session and reaching their highest levels in two weeks, amid fears of renewed military confrontation between the United States and Iran and the continued closure of the Strait of Hormuz to international oil tankers.

Latest developments in the Iran conflict

• US President Donald Trump issued a stern warning to Iran, saying that “time is running out very quickly to reach a peace agreement, or there will be nothing left.”

• Trump is preparing to hold a key meeting in the White House Situation Room with national security leaders to discuss plans for resuming military strikes against Iranian energy facilities and infrastructure.

• Trump held a phone call lasting more than half an hour with Israeli Prime Minister Benjamin Netanyahu to discuss options for returning to full-scale military action.

• The UAE announced it is investigating the source of the drone attack, while Saudi Arabia intercepted three drones in Iraqi airspace.

• An Iranian official warned of “surprise scenarios” if the United States resumes military strikes against Tehran.

Additional Japanese budget

Japanese Prime Minister Sanae Takaichi is expected to instruct the government on Monday to consider preparing an additional budget package, although the size of the package has not yet been determined.

A government source familiar with the matter told Reuters on Monday that Japan is likely to issue new debt as part of financing a planned supplementary budget aimed at easing the economic impact of the Middle East war.

Japanese interest rates

• Amid rising global oil prices, markets continue to price in an approximately 80% probability that the Bank of Japan will raise interest rates by a quarter percentage point at its June meeting.

• Investors are awaiting further Japanese data on inflation, unemployment, and wages in order to reassess those expectations.

Oil prices rose on Friday as markets monitored the possibility of US President Donald Trump returning focus to the stalled conflict with Iran, following the conclusion of his summit with Chinese President Xi Jinping in China.

Brent crude futures for July delivery climbed more than 2% to $108.25 per barrel by 10:18 a.m. Eastern Time.

US West Texas Intermediate crude futures for June delivery also gained more than 2% to $103.76 per barrel.

Trump said in an interview with Fox News that his patience with Iran was beginning to run out, adding: “I’m not going to have much patience anymore. They have to make a deal.”

He also said Chinese President Xi Jinping wants the Strait of Hormuz reopened, noting that the Chinese leader is unhappy with Iran imposing transit fees on ships passing through the strait.

Trump added that Xi agreed not to provide Iran with military equipment.

In the same context, US Treasury Secretary Scott Bessent said in an interview with CNBC on Thursday that China would work behind the scenes to help reopen the Strait of Hormuz.

“It is very much in their interest to reopen the strait,” Bessent said.

Beijing did not address the Hormuz issue in its official statements following the summit, though China’s Foreign Ministry said on Friday that “the use of force is a dead end” and that negotiations remain the correct path forward.

A ministry spokesperson said: “There is no benefit in continuing this conflict, which should not have happened in the first place,” adding that reaching a quick resolution would serve the interests of the United States, Iran, the region, and the wider world.

Trump also said China had agreed to buy more oil from the United States.

“They agreed they want to buy oil from the United States, and they will be going to Texas, and we’re going to start sending Chinese ships to Texas, Louisiana, and Alaska,” he said.

China has not yet confirmed any agreements related to purchases of US energy, while CNBC said it contacted Chinese authorities for comment but did not receive a response before publication.