Gold Defies Oil Price Slump as Central Banks Maintain Buying Spree

Gold prices are holding firm above $4,100 despite a cooling geopolitical premium and falling crude oil prices. Central banks' buying activity is offsetting the decline in demand, creating a structural floor beneath the market.

The recent diplomatic thaw between Iran and the US has led to a sharp decline in oil prices, with WTI crude tumbling over 7% at one point. However, gold prices have remained resilient, gaining 0.80% on the day and 2.85% for the week.

Analysts attribute this counterintuitive behavior to falling oil prices dragging down inflation expectations, which in turn gives the Federal Reserve more room to consider rate cuts. The metal's price is more closely tied to monetary policy than geopolitical tensions.