Gold prices rose during Monday’s trading session in Asian markets, supported by a decline in the US dollar, as investors assessed the impact of the halt in military operations in the Middle East while awaiting the Federal Reserve’s upcoming meeting this week.
Spot gold rose 1% to $4,094.50 per ounce, while US gold futures for August delivery gained 0.6% to $4,096.6 per ounce, after the precious metal had recorded gains of nearly 1% last week amid volatile trading.
The main support for gold came from a 0.3% decline in the US Dollar Index, making the dollar denominated metal less expensive for investors holding other currencies.
Gold also benefited from the sharp decline in oil prices following the halt in military strikes between the United States and Iran over the weekend, raising hopes that diplomatic efforts could gain momentum.
US President Donald Trump had halted a bombing campaign targeting Iranian targets to allow diplomatic efforts to continue, while Iran refrained from carrying out retaliatory attacks against neighboring countries hosting US military bases.
Oil prices fell by more than 5% at the start of trading, giving up part of their gains from last week amid concerns about potential disruptions to supplies through the Strait of Hormuz and the Red Sea.
Although lower oil prices could help ease inflationary pressures, investors are awaiting the Federal Reserve’s assessment of the outlook for the US economy following the recent market volatility.
Attention is turning to the monetary policy decision that the Federal Reserve will announce this week, with expectations pointing to interest rates remaining unchanged. Traders will focus on comments from Federal Reserve Chair Kevin Warsh, seeking signals regarding the timing of any potential interest rate cut and the central bank’s assessment of inflation risks.
Investors are also awaiting the release of a series of US economic data, including inflation and labor market indicators, to obtain further signals about the expected path of monetary policy.
In other precious metals markets, silver prices rose 2% to $59.37 per ounce, while platinum gained 1.6% to $1,618.83 per ounce.
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