Gold drops below $4,200 as oil shock fuels Fed rate worries

Gold prices fell sharply on Monday, dropping below $4,200 per ounce as rising oil prices, a stronger dollar, and higher U.S. bond yields fueled expectations that the Federal Reserve may continue tightening monetary policy. Spot gold was down 2.1% to $4,198.10 per ounce, heading for its steepest daily decline since September 1. Investors now view higher energy costs as a reason for the Fed to remain hawkish, rather than as an inflation hedge for gold. Brent crude climbed above $106 per barrel after President Donald Trump rejected an Iranian proposal regarding the Strait of Hormuz, while the 10-year Treasury yield hovered near 5.2%, a two-decade high. Analysts note that sustained weakness below the $4,300-$4,354 resistance zone could expose support at $4,200 and then $4,000. This week's U.S. data, including job openings, ADP employment, PCE inflation, and nonfarm payrolls, may determine if that support holds. Long-term demand remains intact, with gold-backed ETFs attracting $18 billion in August.