Gold climbs after pause in US-Iran strikes eases oil prices and inflation fears
Gold has largely hovered around US$4,000 an ounce since late June, which some traders see as a key support level
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GOLD rose more than 1 per cent on Monday (Jul 27) 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 per cent to US$4,110.56 per ounce by 0200 GMT. US gold futures gained 1 per cent to US$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 per cent, making greenback-priced metals more affordable for other currency holders.
Iran will halt its own attacks as long as the US does the same, a senior Iranian official told Reuters on Sunday. The development comes as the US pressed pause on its bombing campaign after US 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 per cent for the day.
Since the conflict began in February, oil prices have gained, driving inflation concerns and expectations of rate hikes by the US central bank. 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 US Fed’s Jul 28-29 policy meeting, where investors and economists widely expect rates to be kept unchanged. Traders are pricing in about an 80 per cent chance of a hike in September, according to the CME FedWatch Tool
Among other metals, spot silver rose 2.8 per cent to US$59.81 per ounce, platinum climbed 2.6 per cent to US$1,629.15 and palladium jumped 2.1 per cent to US$1,269.43. REUTERS
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