Gold Falls to Three-Week Low as US-Iran Conflict Lifts Oil, Yields

Gold prices have fallen to their lowest level in over three weeks as the conflict between the US and Iran continues. Despite the geopolitical uncertainty, gold is not behaving like a safe-haven asset, instead falling alongside oil, inflation expectations, Treasury yields, and the dollar.

The price of Brent crude oil has climbed to around $95, a six-week high, after fresh US strikes near the Strait of Hormuz and Iranian retaliation revived fears of disrupted energy flows. This increase in oil prices is lifting inflation expectations, which in turn are raising real and nominal yields, making gold more expensive for buyers outside the US.

The Federal Reserve's dual mandate makes labor market data crucial, with the August ADP employment report due Wednesday and the official nonfarm payrolls report to follow. A strong jobs report could keep the argument against another rate hike alive, but a moderate gain or evidence that hiring is cooling only gradually could keep September tightening odds elevated.

The bearish sequence for gold has a clear shape: employment stays soft but avoids serious contraction, September hike odds remain near 67%, Brent approaches or clears $100, yields remain elevated or climb, and the dollar firms further. If these conditions persist, gold's price may fall below $4,000.