Key Takeaways
- Spot gold prices fell 1.8% to close at $4,016.97 an ounce as the U.S. and Iran agreed to halt military attacks and resume peace talks, significantly dampening safe-haven demand.
- President Donald Trump dismissed a landmark bipartisan housing bill as a "big yawn," declining to commit to signing the legislation despite House Speaker Mike Johnson (GOP) officially forwarding it to the White House.
- Traders are pricing in an 80% probability of a December Fed rate hike, driven by hawkish sentiment from Fed Chair Kevin Warsh and elevated energy prices that continue to fuel inflation expectations.
- The 21st Century ROAD to Housing Act now faces a 10-day constitutional window to become law; Trump has signaled he may allow it to pass without his signature while prioritizing the "SAVE America Act" election bill.
Trump Sidelines Housing Bill in Favor of Election Reform
President Donald Trump has characterized the recently passed bipartisan housing affordability bill as "unimportant" and a "yawn," signaling a potential legislative standoff. Despite the bill receiving broad support in both chambers, Trump indicated he is in no rush to sign the measure, which aims to increase housing supply and limit institutional investors from purchasing single-family homes. House Speaker Mike Johnson (GOP) transmitted the bill to the White House on Monday, triggering a 10-day countdown for the President to either sign, veto, or allow the bill to become law automatically.
The President’s reluctance stems from his demand that the Senate first pass the SAVE America Act, a controversial election integrity bill. Trump stated that the housing bill’s bipartisan nature suggests it contains concessions to Democrats that he does not necessarily support. Analysts suggest that while a veto is unlikely, the President’s dismissive rhetoric underscores a shift in focus toward election-related grievances ahead of the upcoming midterms.
Gold Prices Retrace as Middle East Tensions Cool
Spot Gold (XAU/USD) experienced a sharp decline on Monday, falling 1.8% to settle at $4,016.97 per ounce. The sell-off was triggered by reports that the United States and Iran have agreed to a cessation of hostilities in the Gulf and will resume peace negotiations in Doha, Qatar. This diplomatic breakthrough has led to the reopening of the Strait of Hormuz, removing the acute geopolitical risk premium that had previously bolstered bullion prices.
Despite the drop, some market analysts believe gold will find significant buying support near the $4,000 psychological level. The metal is currently on track for its fourth consecutive monthly loss, having declined approximately 10.5% in June. While the reduction in immediate conflict is bearish for safe-haven assets, long-term structural demand from central banks remains a primary pillar of support for the precious metal.
Fed Hawkishness and Inflation Expectations Weigh on Markets
Market focus remains firmly on Federal Reserve policy and persistent inflationary pressures. Higher energy prices, exacerbated by the earlier stages of the Iran conflict, have solidified expectations for a "higher-for-longer" interest rate environment. Investors are closely watching Fed Chair Kevin Warsh, whose recent hawkish debut has shifted market sentiment away from rate cuts toward the possibility of multiple hikes in late 2026.
The CME FedWatch Tool now indicates an 80% chance of a rate hike by December, raising the opportunity cost for non-yielding assets like gold. As the dollar index heads for its biggest monthly advance since 2025, the stronger greenback continues to exert downward pressure on commodities. Traders are now looking toward upcoming Nonfarm Payrolls data and labor market reports for further clues on the central bank's tightening path.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.