Gold traded near $4,168.90 an ounce, down 0.59%, while silver slipped 0.96% to $60.120. The market sentiment is currently driven by a roughly 87.7% probability of a rate hike by December, as oil-driven inflation concerns keep policy risks in play. Wednesday’s CPI report and subsequent PPI and retail data are expected to provide further clarity on the trajectory of interest rates.

Energy markets continue to react to the U.S.-Iran conflict. Brent crude climbed 1.8% to $106.65 a barrel following comments from Iran’s security chief, Mohsen Rezaei, who dismissed the current U.S. response to Tehran’s conditions for reopening the Strait of Hormuz. This rise in energy costs has exacerbated inflationary pressures, complicating the outlook for non-yielding assets like precious metals.

Beyond central bank policy, the surge in U.S. Treasury yields—with the 10-year note at 5.24%—has introduced fiscal risk into the valuation of gold. Analysts suggest that while debt issuance currently acts as a headwind, persistent fiscal concerns could eventually transform into a support mechanism for bullion. David Morrison of Trade Nation noted that while the metal may need to retest the $4,000 support level, neither bulls nor bears appear ready to concede their positions in the current volatile environment.