Gold prices rose as investors monitored developments in negotiations between the United States and Iran in Switzerland, while also assessing the outlook for US monetary policy after hawkish signals from the Federal Reserve last week.
Spot gold climbed 0.8% to $4,194.83 an ounce, while US gold futures rose 0.9% to $4,211.66 an ounce.
The move came after the precious metal fell 1.4% last week, ending three straight sessions of losses.
Gold received support after Iranian officials announced progress in talks with the United States, which helped ease concerns over prolonged disruptions to global energy supplies and placed pressure on crude oil prices.
Iran’s foreign ministry reported good progress during the quadrilateral discussions in Switzerland, while mediators from Qatar and Pakistan confirmed that negotiators had agreed on a roadmap toward a broader agreement, with technical discussions set to continue this week.
Lower oil prices helped reduce inflation concerns, supporting gold by limiting expectations that energy driven price pressures could push the Federal Reserve toward a more aggressive tightening path.
Brent crude also trimmed earlier gains after signs of diplomatic progress emerged, despite ongoing tensions linked to the Strait of Hormuz.
However, gold’s gains remained limited by expectations that US interest rates could stay elevated for longer.
Markets are still digesting the latest Federal Reserve meeting, where policymakers maintained a hawkish stance and left the door open for further interest rate increases amid persistent inflation risks.
ING analysts noted that geopolitical risks will continue to provide underlying support for gold, but an extended period of high US interest rates could limit the chances of further gains in the near term.
Meanwhile, the US dollar index held close to the 13 month highs recorded last week.
Investors are now awaiting US personal consumption expenditures price index data this week, looking for fresh signals on the future path of monetary policy.
In other precious metals, silver prices rose 1.6% to $66.03 an ounce, while platinum gained 0.3% to $1,671.60 an ounce.
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