Gold rises on weaker oil; inflation, rate outlook in focus

Gold prices firmed on Tuesday, supported by softer oil prices following a fragile Israel-Iran truce, while focus was also on inflation and interest rate hike risks.

Spot gold was up 0.4% at $4,345.71 per ounce, as of 0602 GMT. In the previous session, bullion touched its lowest point in more than two months.

U.S. gold futures for August delivery were up 0.2% at $4,370.80.

“The slight easing of tensions between Israel and Iran has tamed oil prices somewhat and has, by extension, helped gold,” said Tim Waterer, chief market analyst at KCM Trade.

Iran and Israel said on Monday they had halted attacks on each other after an appeal from U.S. President Donald Trump, though Tehran warned it would resume hostilities if Israel continued to hit Hezbollah in Lebanon.

Oil prices eased, erasing most of Monday’s gains.

Elevated crude oil prices can accelerate inflation, and while gold is seen as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.

Goldman Sachs said it expects the U.S. Federal Reserve to keep interest rates unchanged through 2026 and delay rate cuts until 2027, citing stronger economic activity and jobs growth.

Traders are now pricing in a more than 70% chance of a U.S. rate hike by December, according to the CME FedWatch tool.

Investors are bracing for May’s U.S. consumer price index data, due on Wednesday, to gauge the Fed’s monetary policy path.

“A return to $5,500 for gold remains viable by year-end driven in part by central bank demand, but it will likely require cooperation from oil prices, bond yields and the dollar, which would all need to take a turn lower,” Waterer said.

Spot silver rose 0.4% to $68.45 per ounce, platinum gained 0.3% to $1,759.74, and palladium rose 1.5% to $1,223.44.