Gold prices declined on Monday, influenced by an escalation in the Middle East conflict that drove Brent crude above $90 a barrel. This development intensified inflation concerns, with several U.S. Federal Reserve policymakers indicating that interest rate increases might be necessary to mitigate price pressures. Spot gold declined by 0.4% to $4,000.55 per ounce as of 0058, following a drop to a two-week low on Friday and recording a 2.5% loss for the week. U.S. gold futures for August delivery declined by 0.3%, settling at $4,005.9.

Asian share markets exhibited caution on Monday as they approached a week filled with significant technology earnings reports, which will serve as a critical assessment of investor confidence in the ongoing AI momentum. Oil prices surged by 3%, with Brent exceeding $90 per barrel. The U.S. reported the completion of a ninth consecutive night of attacks against Iran, following the earlier announcement of at least two U.S. military personnel killed in Jordan. Meanwhile, U.S. allies in the region indicated an increase in Iranian attacks on Sunday.

Cleveland Fed President Beth Hammack has joined a rising number of policymakers suggesting that interest rates may require an increase to combat ongoing inflation. This development is likely to ignite a vigorous discussion at the Fed’s upcoming meeting and could lead to dissenting opinions during Chairman Kevin Warsh’s second meeting in charge. U.S. consumer sentiment rose to a five-month peak in July; however, this uptick is expected to be short-lived due to escalating tensions in the Middle East, which are driving up petrol prices. High interest rates elevate the opportunity cost associated with maintaining non-yielding assets like gold.

COMEX gold speculators increased their net long position by 4,294 contracts, bringing the total to 119,147 for the week ending July 14, according to CFTC data. Gold discounts in India expanded last week, reaching a one-month peak, as subdued jewellery demand and expectations of declining prices led to a cautious stance among buyers. In contrast, premiums in China remained relatively stable amid lacklustre retail demand. Elsewhere, spot silver increased by 0.9% to $56.42 per ounce, platinum saw a rise of 0.1% to $1,592.97, and palladium experienced a gain of 0.3% to $1,251.74.