Gold prices were little changed on Monday as investors assessed developments in the conflict between the United States and Iran and their impact on oil prices, while Federal Reserve officials signaled that interest rates may need to rise to curb inflationary pressures.

Spot gold fell 0.2% to $4,006.74 an ounce, while US gold futures for August delivery declined 0.1% to $4,015.90 an ounce.

Middle East developments

"Gold continues to move inversely to oil prices, while market participants closely monitor developments in the Middle East," said Giovanni Staunovo, an analyst at UBS.

US forces continued their strikes on Iran for a ninth consecutive day, while concerns mounted over shipping through the Strait of Hormuz after Iran said two oil tankers were hit by explosions that left them disabled.

Oil prices pared earlier gains after reaching their highest levels in more than a month, following comments from Iran's Foreign Ministry spokesperson suggesting that negotiations with the United States could resume if they serve the country's national interests.

Higher oil prices add to inflation concerns and strengthen expectations that interest rates will remain elevated for longer. Although gold is traditionally considered a hedge against inflation, higher interest rates reduce the appeal of the non-yielding metal.

Federal Reserve policy

On the monetary policy front, Cleveland Federal Reserve President Beth Hammack joined a growing number of Fed officials who believe interest rates may need to rise to address persistent inflation, setting the stage for a heated debate at the central bank's next meeting and possible dissent during the second meeting chaired by Kevin Warsh.

According to the CME FedWatch Tool, markets raised the probability of a Federal Reserve rate hike in December to 80%, up from 73% last week.

"We expect a weaker dollar to support gold prices over the next six to 12 months, with the metal likely to climb back above $5,000 an ounce," Staunovo added.

Wall Street's major indexes advanced on Monday, led by a rebound in semiconductor stocks, as investors looked ahead to a crucial wave of earnings from major technology companies that have been the primary driver of the AI-fueled rally in US equities.

The pace of second-quarter earnings reports is set to accelerate later this week, with results due from Alphabet (Google), Tesla, Intel, and IBM.

Investors are also closely watching earnings from Intel and Texas Instruments for signs that the semiconductor industry can regain momentum following its recent sharp correction.

Heavy spending on AI infrastructure by hyperscale cloud providers has been one of the biggest forces behind this year's market gains, boosting semiconductor stocks and other companies benefiting from the rapid expansion of artificial intelligence investments, helping Wall Street reach record highs.

However, last week's selloff raised concerns that the market's previous gains may have become overstretched.

Semiconductor stocks rebound after entering bear market

The Philadelphia Semiconductor Index (SOX) closed Friday more than 20% below its record high reached in late June, officially confirming its entry into bear market territory. The index, however, rebounded 2.5% during Monday's session.

"The margin for error in the market has become much smaller at this stage, and any event or earnings report could easily push stocks lower," said Jack Haire, Chief Investment Officer at GuideStone Funds.

"As we move into the second half of the year, investor expectations are significantly higher than they were before," he added.

According to LSEG data, analysts now expect S&P 500 companies to deliver 26% year-on-year earnings growth in the second quarter, up from an earlier forecast of 23.7%.

As of 9:50 a.m. ET, the Dow Jones Industrial Average was up 78.39 points, or 0.15%, at 52,224.81.

The S&P 500 gained 44.81 points, or 0.60%, to 7,502.50, while the Nasdaq Composite rose 234.45 points, or 0.92%, to 25,754.69.

Technology stocks lead gains

Micron Technology led gains among semiconductor stocks, climbing 5.1%, while SanDisk advanced 5.4%.

Alphabet rose 3.4% after a report said the Google parent is developing new chips to power its own artificial intelligence models.

The information technology and communication services sectors led gains among the S&P 500's major sectors.

The rebound came despite last week's decline in US equities, even after softer-than-expected inflation data eased concerns about a potential Federal Reserve rate hike in July and major US banks kicked off the earnings season with strong results.

According to CME Group's FedWatch Tool, markets are currently pricing in roughly a 15% probability of a 25-basis-point rate hike at the Federal Reserve's July meeting.

Geopolitical risks remain in focus

Investors also continued to monitor developments in the conflict involving the United States, Israel, and Iran following the latest escalation in the nearly five-month-long war, which has renewed concerns about inflationary pressures.

Meanwhile, the Iran-aligned Houthi movement in Yemen announced a maritime blockade on Saudi Arabia, opening a new front in the Middle East conflict and increasing risks to global energy supplies and trade routes.

Among individual stocks, Domino's Pizza gained 3.6% after the company reported quarterly revenue that narrowly exceeded Wall Street expectations.

In the broader market, advancing stocks outnumbered decliners by 1.14-to-1 on the New York Stock Exchange and by 1.11-to-1 on the Nasdaq.

The S&P 500 recorded eight new 52-week highs against one new low, while the Nasdaq Composite posted 31 new highs and 55 new lows.

Canada’s annual inflation rate slowed to 2.8% in June, below market expectations, supported by a sharp decline in gasoline prices following the signing of a memorandum of understanding between the United States and Iran aimed at ending the war, data showed on Monday.

However, fighting later resumed in the Middle East, prompting gasoline prices to begin rising gradually again.

Statistics Canada said the Consumer Price Index (CPI) fell 0.4% month-on-month in June.

Economists polled by Reuters had expected annual inflation of 2.9% and a monthly decline of 0.2%.

Inflation had reached 3.2% in the previous month, its highest level in 29 months, exceeding the Bank of Canada’s 3% upper target limit for the first time in more than two years.

Gasoline prices drive inflation lower

Statistics Canada said gasoline prices were the main factor behind the slowdown in inflation, after prices at the pump fell by more than 10% in June.

On an annual basis, gasoline prices rose 20.5% in June, compared with a 33.2% increase in May.

Excluding gasoline, annual inflation held steady at 2.2%, unchanged from the previous month.

Even so, transportation costs, which account for around 18% of the CPI basket, rose 6.7% year-on-year in June as fuel prices remained elevated during part of the period.

Several other components of the inflation basket also recorded increases of more than 3%, with food prices rising 3.5% and prices for recreation, education and reading increasing 3.8%.

Meanwhile, the annual increase in food purchased from stores slowed to 3.9% in June from 4.3% in May.

June nevertheless marked the 17th consecutive month in which grocery inflation exceeded the overall inflation rate.

Core inflation measures continue to ease

The data also showed a further decline in the core inflation measures closely monitored by the Bank of Canada to assess underlying price pressures.

CPI-median fell to 1.9% in June from 2.1% in May.

CPI-trim also declined to 1.8% from 2.0% in the previous month.

Following the release, the Canadian dollar weakened 0.18% against its US counterpart to C$1.4045 per US dollar, equivalent to 71.20 US cents per Canadian dollar.

Bitcoin (BTC) continued to trade below its 50-day exponential moving average (EMA) near the $65,000 level on Monday, a key technical threshold that could determine the cryptocurrency's next directional move.

Although institutional demand improved through spot Bitcoin exchange-traded funds (ETFs) last week, the escalating military confrontation between the United States and Iran continued to dampen investors' appetite for risk, keeping pressure on the world's largest cryptocurrency.

Geopolitical tensions cap Bitcoin's gains

US Central Command (CENTCOM) said on X that it had completed a ninth consecutive night of strikes against Iran, with operations concluding at 10:00 p.m. Eastern Time on July 19.

US President Donald Trump said the latest strikes were carried out in honor of American service members killed in recent days, while CENTCOM stated that the attacks were aimed at degrading Iranian military capabilities used to target commercial shipping and civilians transiting the Strait of Hormuz.

Iran responded by launching ballistic missiles and attack drones targeting US allies across the region, while Bahrain, Jordan, Kuwait, and Iraq all reported a fresh wave of attacks.

The United States also recently reimposed a naval blockade on Iranian ports and tightened restrictions on a previous license allowing the sale of Iranian oil, while Iran's Revolutionary Guard intensified surveillance of shipping traffic and efforts to restrict navigation through the Strait of Hormuz.

These developments heightened concerns that the conflict could spread further across the region, prompting investors to price in a higher geopolitical risk premium and reducing demand for higher-risk assets, including cryptocurrencies.

The renewed rise in oil prices also revived concerns over energy-driven inflation, strengthening the US dollar's appeal as a safe-haven asset and limiting Bitcoin's upside potential.

Institutional demand shows modest improvement

Data from SoSoValue showed that spot Bitcoin ETFs attracted net inflows of $75.67 million last week, marking a second consecutive week of positive inflows following a period of sustained outflows.

The continued return of institutional money suggests investors are gradually re-entering the market, a trend that could support a broader Bitcoin recovery if inflows accelerate further this week.

Simon-Peter Mesabni, Head of Business Development at XS.com, said ETF inflows had resumed but remained insufficient to trigger a decisive bullish breakout.

He added that market sentiment had improved on the back of easing US inflation and renewed ETF inflows, but Bitcoin's failure to break above the $65,000-$65,500 range suggests current buying pressure is only sufficient to limit declines rather than confirm a new upward trend.

"The $65,000-$65,500 range remains the key resistance zone in the near term. If Bitcoin manages to break above it and hold those gains, the recovery could extend toward $67,000-$68,000. However, if selling pressure persists and ETF inflows weaken again, the cryptocurrency could retest the $62,000 area, followed by the important psychological level at $60,000," Mesabni said.

He added that the market is not lacking reasons for investors to buy Bitcoin, but what it still needs is a strong and sustained catalyst, most likely in the form of significant capital inflows capable of turning the current rebound into a genuine uptrend.

A close above $65,000 could pave the way for further gains

Bitcoin was trading near $64,200, holding above an important horizontal support level at $64,004 but remaining below several major moving averages.

The 50-day EMA near $65,000, together with the 100-day moving average at $68,128 and the 200-day moving average at $74,074, represent key resistance levels that continue to keep the broader technical outlook tilted to the downside.

The Relative Strength Index (RSI) was hovering around 52, indicating broadly neutral momentum, while the Moving Average Convergence Divergence (MACD) indicator remained in positive territory but had begun losing momentum, signaling that bullish strength is fading.

If Bitcoin closes above the $65,000 level on a daily basis, it could open the door to gains toward $68,128 and then $74,074, with further resistance near $84,410.

However, if support at $64,004 is broken, the cryptocurrency could extend its decline toward $62,000, followed by the key psychological level at $60,000.