Gold Soars Above $4,050 on Trump's Iran Strike Pause

The price of gold rose above $4,050 on Monday as US President Donald Trump paused planned military strikes against Iran. The news came after reports that Trump had cancelled the strikes in anticipation of a breakthrough in talks over Iran's nuclear program and the reopening of the Strait of Hormuz.

According to Bloomberg, Trump claimed he held off on the strikes due to the rapid progress being made towards a deal with Tehran. However, Iranian officials have disputed this claim, stating that it was 'nothing but a new lie' and that their armed forces remain on high alert.

The ongoing tensions in the Middle East may limit the upside for gold as they could push up crude oil prices and prompt central banks to keep interest rates elevated. Last week, the US Federal Reserve left interest rates unchanged at 3.50-3.75%, with Fed Chair Kevin Warsh reiterating their commitment to bringing down inflation.

Despite this, Commerzbank's FX Research team notes that investors are still turning to gold as a hedge against inflation and market volatility, driven by the combination of rising oil prices and lingering inflation risks.