Gold prices rose on Monday as oil prices declined after US President Donald Trump paused new attacks on Iran in hopes of reaching a quick agreement. The move eased some concerns about inflation and further interest-rate increases.
Spot gold gained 0.4% and reached about $4,060 per ounce.
The US dollar also came under pressure after authorities intervened in currency markets to support the Japanese yen. A weaker dollar made gold cheaper for investors using other currencies and helped increase demand.
Tim Waterer, a market analyst at KCM Trade, said gold began the week positively. However, he warned that uncertainty in oil markets and the Middle East continued to limit gains. He described the rise as encouraging but said traders remained cautious.
Trump said talks with Iran would take place on Monday, although he did not set a deadline for an agreement. Oil prices fell by more than 4% after his comments.
Gold has faced pressure since the US-Iran conflict began. The war raised fears that higher energy costs could keep inflation elevated and force central banks to raise interest rates. Although investors often view gold as protection against inflation, high rates reduce its appeal because the metal provides no regular income.
On Friday, three Federal Reserve officials who supported higher rates warned that inflation could remain above the bank’s 2% target unless borrowing costs increased quickly.
Investors are now watching several US employment reports due this week, including ADP data and the nonfarm payrolls report. The results could influence future Federal Reserve decisions.
Waterer said gold needs lower oil prices, a weaker dollar and a shift toward rate cuts to extend its gains. Renewed Middle East tensions or strong jobs data could increase expectations of a September rate rise and limit further gains during the coming sessions across global markets.
