Gold Rises Amid Global Oil Price Decline

Gold prices saw a notable rise on Monday, following the suspension of hostilities in the Middle East, which contributed to a decline in oil prices. This eased concerns regarding inflation and the potential for prolonged interest rate hikes. Spot gold climbed 1.3% to $4103.99 per ounce by 00:58 GMT. US gold futures for August delivery also increased by 0.9% to reach $4106.10. This upward movement came after a senior Iranian official stated Sunday that his country would halt its attacks provided the United States took a similar step. Consequently, oil prices dropped by 5%, as investors banked on the possibility of a diplomatic resolution to de-escalate the conflict. Rising oil prices typically fuel market fears about inflation and the likelihood of interest rates remaining elevated for an extended period. While gold is often viewed as a hedge against inflation, its appeal diminishes when interest rates rise, as it offers no yield. Concurrently, both the dollar and 10-year US Treasury yields experienced a decline, providing additional support for gold prices. The Federal Reserve is widely expected to keep interest rates unchanged during its meeting this week. However, the CME Group's FedWatch tool indicates that traders still anticipate an 80% probability of a rate hike in September. Among other precious metals, spot silver advanced 2.7% to $59.74 per ounce, platinum increased by 2% to $1619.75, and palladium surged 2.3% to $1271.93.