Gold price falls toward $4,060, weighed down by Middle East tensions and expectations of rate hikes

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Gold (XAU/USD) has fallen toward around $4,060, and remains in a soft, range-bound movement.

Among the reasons are opacity surrounding talks between the US and Iran, compounded by persistent expectations for a Federal Reserve rate hike.

Market attention is also turning to upcoming US employment data, which could be a crucial factor shaping gold’s direction.

Why is the gold price falling?

① US-Iran talks fail to ease market anxiety

The US and Iran plan to hold discussions in Doha, Qatar, to resolve the dispute over the Strait of Hormuz.

US government officials say, “Both sides will refrain from military action for the time being.”

Meanwhile Iranian Foreign Minister Araghchi stated

“Iran bears responsibility for the Hormuz Strait”

and a Iran government official warned that any attempt to bypass Iran’s designated shipping routes would raise tensions further, keeping Middle East risk in focus for markets.

② Inflation concerns bolster rate hike expectations

If Middle East tensions worsen again, oil prices could rise, heightening inflation pressures and increasing the likelihood of additional Fed rate hikes.

Gold is bought as an inflation hedge, but as a non-interest-bearing asset it can be pressured when high rates persist.

③ Market prices in September rate hike probability at 59.7%

According to CME FedWatch, the market prices a 59.7% chance of a rate hike at the FOMC meeting in September 2026.

Persistent expectations for higher rates are a factor keeping a lid on gold’s upside.

Key points to watch going forward

Markets are focused on upcoming US employment-related data releases.

Market expectations are,

• Non-Farm Payrolls (NFP): +114,000
• Unemployment rate: 4.3%

If the jobs data come in stronger than expected, Fed rate hike expectations could rise further, putting downward pressure on gold prices.

Summary

✅ Gold price falls toward around $4,060

✅ US-Iran talks show some progress, but Middle East tensions remain

✅ Inflation concerns support Fed rate hike expectations

✅ Probability of a September rate hike at 59.7%

✅ Markets will watch upcoming US employment data

Uncertainty surrounding Middle East tensions persists, and markets remain keenly focused on Fed policy.

If upcoming US employment data beat expectations, rate hike expectations may strengthen further, potentially pushing gold prices lower. It will be important to watch both economic indicators and Middle East developments.In the coming releases, stronger-than-expected US employment data could further lift rate-hike expectations and weigh on gold. Attention should be paid to both economic indicators and Middle East tensions.