Gold drops below $4,200 as oil shock and Fed expectations weigh

Gold prices fell sharply Monday, dropping below $4,200 per ounce as rising oil prices, a firmer dollar, and higher US bond yields fueled expectations the Federal Reserve may continue tightening policy. Spot gold declined 2.1% to $4,198.10 per ounce, while US gold futures fell 2.1% to $4,231, putting the metal on track for its biggest daily drop since September 1. Brent crude rose above $106 per barrel after President Trump rejected an Iranian proposal to reopen the Strait of Hormuz, reinforcing inflation concerns that investors now interpret as a reason for restrictive Fed policy. The 10-year Treasury yield hovered near 5.2%, a two-decade high, increasing the opportunity cost of holding non-yielding gold. Analysts identify $4,200 as a key short-term test, with $4,000 as the next support level. Despite the correction, structural demand remains strong, with global gold ETFs attracting $18 billion in August, the second-largest monthly inflow on record.