Gold's Monday Rally Crushed as Oil Prices Plunge

The gold market took a hit on Monday after opening with a gap higher and then rapidly giving back its gains. The metal rose to $4,106 in Asian hours but by the end of the session it had fallen back to around $4,075, barely changing from Friday's settle price.

This full round-trip was mirrored across other assets as well, with the S&P 500 opening up on futures and then closing flat. The catalyst behind this movement was a pause in hostilities between the US and Iran, which saw Brent September futures fall by as much as 7.4% to below $90 a barrel.

The impact of lower oil prices is twofold for gold, with the reduction in inflation impulse supporting the metal but also removing its geopolitical premium bid. As such, gold initially rallied on the news before surrendering its gains by the New York morning.