Gold Price Muted Amid Rate Hike Expectations as Iran-Israel Tensions Ease

The price of gold remained muted on Monday as rate jitters offset the sentiment boost from Iran and Israel ending their strikes. Despite a weakening dollar, the precious metal market participants were cautious ahead of key inflation data releases this week.

Gold futures are down 0.3% to $4,351.50/oz, while spot gold is trading at $4,327.96/oz. The yellow metal has been under pressure after a blowout May U.S. jobs report bolstered wagers that the Federal Reserve would likely raise interest rates later this year.

Traders will get a clearer picture of inflationary impact on Americans with the release of consumer price index and producer price index reports due on Wednesday and Thursday, respectively. If the readings come in hotter than anticipated, odds of Fed interest rate hikes could get another boost, weighing on gold prices.

David Morrison, senior market analyst at Trade Nation, said that 'inflation may be picking up around the world, and gold is often considered as a hedge against high inflation. However, it's the prospect of higher interest rates to counter price increases which continues to weigh on gold.'