Gold falls as US-Iran hostilities keep rate hike bets on table

July 20, 2026 / Liam Redmond /

Published Mon, Jul 20, 2026 · 09:35 AM

[SINGAPORE] Gold declined on Monday (Jul 20) after the US and Iran ramped up attacks over the weekend, stoking bets that the Federal Reserve may need to raise interest rates to contain inflation.

Bullion was trading around US$3,995 an ounce, after sliding more than 2 per cent last week.

Oil jumped after the escalation of hostilities in the Middle East, including an attack on a vital oil facility in Kuwait and the targeting of ships attempting to transit through the Strait of Hormuz.

Teheran said the ceasefire between the US and Iran has been effectively abandoned, raising the possibility of deepening disruptions to crucial energy flows through the narrow waterway.

The Iran conflict, now in its fifth month, is again driving up energy and commodity prices from fuel to raw materials used in manufacturing and food production.

That is kindling fears that the Fed may eventually tighten monetary policy, even as soft US economic data suggest a rate hike is not likely in the near term. Higher borrowing costs are a headwind for non-yielding bullion.

Bank of Cleveland president Beth Hammack in a LinkedIn post on Friday joined a growing chorus of Fed officials in expressing concern over high inflation. Swap traders have priced in at least one hike by the end of the 2026.

Bullion has hovered in a narrow range around US$4,000 in recent weeks after losing 14 per cent in the second quarter, its worst showing since 2013.

Spot gold was 0.6 per cent lower at US$3,992.91 an ounce as at 7.30 am in Singapore. Silver slid 0.4 per cent to US$55.70 an ounce.