Gold Crashes Below $4,200 as Oil Strength Fails to Boost Prices

Gold prices plummeted to new lows on Monday, falling below $4,200 an ounce as rising oil prices and higher US bond yields sent shockwaves through the market.

The unexpected move comes despite the fact that gold typically benefits from inflation scares driven by high energy costs. However, investors are treating the current situation differently, with many expecting the Federal Reserve to remain hawkish in its monetary policy.

According to commodity analyst Barbara Lambrecht of Commerzbank, earlier-than-expected Fed tightening is lifting both nominal and real yields, making it more expensive for investors to hold gold.

The near-term test for gold is now $4,200, with the next support level sitting at $4,000. OCBC strategists warn that persistent weakness below the $4,300-$4,354 resistance zone could expose these supports.