Gold Surges as US-Iran Tensions Ease, Oil Prices Plunge
Gold prices surged above $4,100 an ounce on Monday as tensions between the US and Iran eased, causing oil prices to plummet. The temporary halt in hostilities sent Brent crude tumbling by as much as 9.5%, while gold rose 1.6% to reach a high of $4,100.
The drop in oil prices is significant because it reduces inflation fears ahead of the Federal Reserve's meeting on Wednesday. A weaker dollar index also made gold more attractive to international buyers, with spot gold up 1.1% to $4,095.16 an ounce and silver jumping 1.9% to $59.27.
Analyst Ross Norman noted that precious metals are benefiting from the pause in Middle East hostilities, which has eased concerns about rising energy costs and inflation. However, not everyone is optimistic about gold's prospects, with Justin Lin of Global X ETFs cautioning that a meaningful resolution between the US and Iran is needed to break above the $4,000-$4,200 range.
As the market waits for the Fed's decision on interest rates, traders are pricing in a 77% chance of a rate increase in September. Meanwhile, gold has been range-bound since late June, with persistent demand preventing prices from breaking below $4,000.