Gold Climbs on Weaker Dollar as Iran Deal Hopes Send Oil Prices Reeling
Gold prices rose on Monday as the US dollar weakened and optimism over a possible US-Iran deal sent oil prices plummeting. Spot gold gained 0.3% to $4,052.96 per ounce, while US gold futures edged 0.2% higher to $4,051.70. This marks the first monthly rise in five for gold, with a gain of about 1% in July.
The decline in oil prices was attributed to US President Donald Trump's decision to hold off on a fresh attack on Iran as he sought a quick deal that would halt Tehran's nuclear ambitions and reopen the Strait of Hormuz. Oil prices fell by more than $4 a barrel, leading to reduced expectations for interest rate hikes in the US.
According to UBS analyst Giovanni Staunovo, 'the lower oil price is today reducing modestly US rate hike expectations for this year, and supporting gold.' He also noted that a weaker US job market would allow the Fed to keep rates on hold, which would be positive for gold as the market prices out rate hikes for this year.