Global precious metal markets faced a significant correction on Monday. Gold prices plummeted to their lowest levels in the last two months, yielding to growing expectations of a tightening monetary policy in the US. Investors are forced to revise their strategies amidst conflicting signals: on one hand, solid economic data, and on the other, the escalation of a geopolitical crisis.

Economic Shock: Employment vs. Gold

The main driver of the decline was the release of US employment data. The figures came in stronger than forecast, immediately intensifying expectations of a Federal Reserve (Fed) interest rate hike. For gold, which yields no dividends, rising rates are a classic negative factor. High yields from alternative instruments, such as government bonds, make holding the "yellow metal" less attractive for major institutional investors.

Against this backdrop, the yield on 10-year US Treasury bonds jumped to a two-week high, creating strong pressure on precious metal quotes. During trading, the spot price of gold fell by 0.9%, settling at $4,290.66 per ounce. This is the lowest level since March 23 of this year.

The Middle East Factor: Oil and Inflation

Alongside macroeconomic factors, the geopolitical backdrop played its part. A new exchange of strikes between Israel and Iran, as well as the resumption of attacks on Lebanon, led to a sharp rise in oil prices. The cost of black gold jumped by more than $4.

This spike has sparked new global fears regarding accelerating inflation. Although gold is traditionally viewed as a hedge against inflation, in the short term, rising energy prices only increase pressure on central banks, forcing them to maintain a strict policy, which in turn hits metal quotes.

Correction in Other Metal Markets

The negative dynamics also affected other members of the precious metal group. The market showed a synchronized decline:

  • Silver: spot price fell by 1.2%, settling at $66.98 per ounce.
  • Platinum: lost about 1.1% of its value, dropping to $1,757.53.
  • Palladium: became cheaper by 0.5%, reaching the $1,219.61 mark.

Forecasts: Waiting for Inflation Statistics

Further market movements will depend on upcoming US inflation reports. Key benchmarks will be the Consumer Price Index (CPI) data for May, as well as the Producer Price Index report. Experts warn: if inflation indicators turn out to be "hotter" than forecasts or if the Fed presents too rigid a forecast, gold could test the next psychologically important support line at $4,000 per ounce.

Last week, gold already showed weakness due to the strengthening dollar and rising oil prices. The new escalation of the conflict in the Middle East has finally shattered investors' hopes for a quick peaceful settlement between the US and Iran, leaving commodity markets in a state of high volatility.