Gold prices rose by 1.4% on Monday, with one ounce trading above $4,110 as falling oil prices eased inflation concerns and a weaker US dollar supported demand.
A temporary pause in the Middle East conflict pushed oil prices lower. The decline reduced fears that higher energy costs could drive inflation upward again. Traders also focused on the US Federal Reserve meeting and interest rates.
Gold futures for delivery next month traded at around $4,112 per ounce.
Tim Waterer, an analyst at KCM Trade, said gold became the main beneficiary. He explained that lower oil prices lifted the metal, while weakness in the US dollar provided further support.
Oil prices fell by about 5% during the session. Meanwhile, the dollar index declined by 0.3% against six major global currencies. A weaker dollar usually makes gold cheaper for buyers using other currencies.
A senior Iranian officialsaid that Tehran would suspend attacks on US interests in the region as long as Washington stopped its strikes on Iran.
Recent US attacks on Iran had pushed oil prices higher and renewed inflation concerns. Those developments created pressure on gold because investors expected central banks to maintain tighter monetary policy.
Waterer said gold still shows a strong upward trend from a fundamental perspective. However, he added that short-term movements remain closely linked to oil prices and geopolitical developments.
Investors are now waiting for this week’s Federal Reserve meeting. Most analysts expect the central bank to keep interest rates unchanged.
However, traders estimate an 80% chance that the Federal Reserve will raise rates in September. Any shift in expectations could affect the dollar, bond yields and gold prices.
For now, lower oil prices, a softer dollar and reduced regional tensions have strengthened global gold demand and pushed the metal above the $4,110 level.
