Gold Surges on Reduced Tensions and No Rate Hikes Expected

Gold prices surged on Monday due to reduced US-Iran tensions and expectations of no interest rate hikes from the Federal Reserve. Spot gold increased by 1.4% to $4,110.56 per ounce, while U.S. gold futures rose 1% to $4,112.10.

The escalation in hostilities between the two countries had driven up oil prices and fueled inflation concerns, making gold less appealing as a hedge against inflation. However, with the temporary halt in US-Iran attacks, oil prices dropped, alleviating inflation worries and making dollar-denominated metals more accessible for holders of other currencies.

Tim Waterer, chief market analyst at KCM Trade, noted that gold benefited from the simultaneous declines in oil and the U.S. dollar. He remains constructively bullish on gold over the long term but cautions that its near-term trajectory is heavily dependent on oil price movements.