Gold slides to multi-month lows as oil shock reshapes interest rate expectations
Today’s markets analysis on
Gold extended its decline on Monday, retreating to its lowest point in several months as rising Treasury yields and a firmer dollar are driving the selloff. Disruptions to critical energy supply routes in the Middle East continued to push oil prices higher, reigniting inflation fears and forcing markets to reprice the trajectory of global monetary policy.
Major central banks held rates steady last week but signalled a readiness to tighten if price pressures persist. Interest rate cuts are no longer expected in the US, while other central banks are seen as likely to hike interest rates in their upcoming meetings, weighing down on non-yielding assets like gold.
The metal could remain exposed to short-term risks, and could see its trajectory driven primarily by developments in the Middle East and their impact on inflation expectations. However, the market could continue to find some support over the long term as tensions remain elevated in Eastern Europe, and central banks continue to accumulate gold, which could help limit losses. At the same time, a return to normal conditions in the oil market could help gold rebound.
Zaid Barem / ymm
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