Trump Refuses To Discuss Reopening The Strait, Gold Prices Under Pressure Again, Non-Farm Payrolls Coming This Week, A Showdown Between Bulls And Bears About To Erupt!

In early Monday trading, spot gold opened slightly lower but quickly weakened, continuing the weak trend seen in last week's weekly decline. Market sentiment has clearly shifted to caution, with the US dollar index rebounding and oil prices opening higher, all of which have put pressure on gold prices. The real driving force behind this is the geopolitical risk revaluation signal released by Trump's rejection of Iran's proposal to reopen the Strait of Hormuz, which has reinforced expectations for further Fed tightening. 

The direct catalyst for this round of gold price declines came from Trump's explicit rejection of Iran's proposal over the weekend. Previously, Iran had proposed through channels such as Qatar to reopen the Strait of Hormuz within seven days after the verification, push for a regional ceasefire, and demand the unfreezing of at least $12 billion in assets frozen since 1979, lifting sanctions on Iranian oil, and ending the war in Yemen. Trump bluntly stated that this was not an agreement he was willing to accept, and said Iran was eager to compromise after suffering a heavy defeat, overestimating its own assets. He also said negotiations with Iran are expected to resume within days, but remains open to whether to resume bombings, and reportedly may act again after the midterm elections in November.

This negotiation deadlock makes it difficult for the market to price in the fading of the true risk premium. Although gold theoretically benefits from geopolitical uncertainty, its safe-haven aura has been significantly weakened by a stronger dollar and rising oil prices driving up inflation expectations. Investors prefer to hold yield-generating assets rather than zero-interest gold.

On a longer-term perspective, gold prices fell about 2.1% last week, mainly due to the continued rise in U.S. Treasury yields, with the 10-year yield reaching its highest level in 19 years, significantly increasing the opportunity cost of holding non-yielding gold. After the Federal Reserve raised rates by 25 basis points last week, officials sent unanimous hawkish signals, with market pricing in further hikes in October and December rising to 66% and 93%, respectively. Energy prices remain high due to Middle East conflicts, further intensifying upside inflation risks and forcing central banks to maintain tightening frameworks. 

Gold has always been regarded as an inflation hedge, but during periods of rapid rate hikes, this attribute often gives way to funding cost considerations. Looking ahead to this week, the market will simultaneously face the US nonfarm payroll report, the RBA rate decision, and speeches by central bank officials from multiple countries, with the US-Iran situation remaining a key variable. 

Market Insight:

Trump's rejection of Iran's proposal to reopen the strait has strengthened the dollar's safe-haven and oil price support in the short term, combined with high U.S. Treasury yields and the Fed's hawkish stance, which continues to weigh on gold's appeal. However, uncertainty and potential negotiation windows remain in the Middle East, and gold's status as a final safe-haven asset has not been completely denied. Whether gold prices can stabilize ultimately depends on the market's repricing of the balance between high interest rates and high risks.