Gold gains on pause in US-Iran fighting; Fed decision looms
- Spot gold rose 1.4% to $4,110.56 per ounce
Gold prices surged over 1% as easing Middle East tensions lowered oil prices and inflation concerns, while investors await the US Federal Reserve's policy decision.
- Impact of Middle East de-escalation on oil and gold prices.
- Influence of the US dollar's performance on metal prices.
- Anticipation of the Federal Reserve's upcoming policy meeting.
Gold rose more than 1% on Monday as a pause in Middle East hostilities sent oil prices lower, alleviating some inflation concerns, while investors awaited the US Federal Reserve’s policy decision.
Spot gold rose 1.4% to $4,110.56 per ounce by 0200 GMT.
US gold futures gained 1% to $4,112.10.
“Gold is a clear beneficiary today of the dual price action in oil and the US dollar, both of which have dropped on de-escalation hopes between the US and Iran. Lower oil is easing inflation concerns,” said Tim Waterer, chief market analyst at KCM Trade.
The US dollar index was down 0.3%, making greenback-priced metals more affordable for other currency holders.
Iran will halt its own attacksas long as the United States does the same, a senior Iranian official told Reuters on Sunday.
The development comes as the United States pressed pause on its bombing campaign after President Donald Trump’s advisers told him they were running out of targets and expressed worries about depleting the US arsenal.
Oil prices were down more than 4% for the day.
Since the conflict began earlier this year, oil prices have gained, driving inflation concerns and expectations of central bank rate hikes.
This has weighed on gold, which, despite traditionally being seen as an inflation hedge, becomes less attractive as higher rates raise the opportunity cost of holding the non-yielding metal.
“Longer term, I remain constructively bullish on gold. Gold’s immediate fate is closely tied to where oil prices head from here and the path higher is likely to remain volatile and heavily influenced by geopolitical headlines until a more durable peace takes hold,” Waterer added.
Market focus is also on the Federal Reserve policy meeting this week, where investors and economists widely expect rates to be kept unchanged. Traders are pricing in about an 80% chance of a hike in September, according to the CME FedWatch Tool
Among other metals, spot silver rose 2.8% to $59.81 per ounce, platinum climbed 2.6% to $1,629.15 and palladium jumped 2.1% to $1,269.43.
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