Gold Prices Falter on Oil Price Rise and Fading Diplomatic Hopes

Gold prices hovered around the flatline on Tuesday after reaching its highest point in over two months, as fading hopes for a diplomatic breakthrough in the Middle East lifted oil prices and kept interest rate hikes in play.

The precious metal had edged down by 0.1% to $4,385.72 an ounce, while silver had edged up by 0.6% to $4,444.30 an ounce at 10:15 ET (14:15 GMT).

Oil prices increased the opportunity cost of holding non-yielding assets like bullion.

Despite this, Tony Sycamore, senior market analyst at IG, suggested that broader resilience in gold points to fear-of-missing-out buying among investors who missed the yellow metal's previous slide toward $4,000, as well as short-covering by speculative accounts and a return of safe-haven demand.

China continues to provide an important source of underlying demand for gold. The People's Bank of China increased its gold reserves in July by the most since October 2023.