Gold prices fell more than 2% and dropped below $4,200, pressured by hawkish signals from the Federal Reserve and a strengthening US dollar.

1. During the early Asian session on Monday, spot gold once fell more than 2%, dropping below the 4,200 mark to around $4,193.94. The strengthening US dollar and hawkish signals from Federal Reserve policymakers have weakened the appeal of precious metals.2. After a 25-basis-point rate hike in September, Federal Reserve officials indicated that further hikes might still be needed to curb inflation, which remains at an unacceptably high level. As a result, market expectations for "higher for longer" interest rates have increased. Cleveland Fed President Beth Hammack said on Friday that inflation risks remain elevated and restrictive monetary policy should be maintained.3. Fed Governor Michael Barr stated that "further policy adjustments may be necessary" to control inflation. Both Fed Chair Tom Barkin and Boston Fed President Susan Collins support the recent rate hikes, citing persistent inflation pressures. Higher interest rates typically suppress gold because gold does not generate interest, making interest-bearing assets relatively more attractive.4. Kelvin Wong, Senior Market Analyst at OANDA, noted that market attention will continue to focus on the interest rate situation. When the market starts pricing in a more hawkish Fed, the US dollar strengthens, which negatively impacts gold.5. After Trump rejected Iran's weekend proposal to reopen the Strait of Hormuz and end the conflict, Iran insisted that only diplomatic means can resolve the conflict with the US and Israel. Oil prices rebounded by more than 1%. This also weighed on gold prices in the short term, as renewed inflation concerns supported further rate hike expectations from the Federal Reserve.