Gold Gains Momentum as Fed Hike Expectations Drop, Despite US-Iran Tensions

Gold prices surged to around $4,395 during early Asian trading hours on Monday as expectations for a US Federal Reserve interest rate hike cooled down. This came after the release of weaker-than-expected US Retail Sales data, which showed a 0.6% monthly decline in July.

The report, coupled with last week's Consumer Price Index and Producer Price Index data, suggested that inflationary pressure is easing, weighing on the US Dollar and boosting the price of gold, a USD-denominated commodity.

Money markets have priced in nearly a 33.1% chance of a September Fed hike, according to the CME FedWatch tool, which reduces the opportunity cost of holding non-yielding bullion, increasing its appeal as an investment.

However, persistent tensions between the US and Iran may cap gold's upside, with both countries engaging in a diplomatic standoff over the Strait of Hormuz waterway.